Latest / Masters in Business / Zeke Faux on Crypto and the Digital Asset Frenzy

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Zeke Faux on Crypto and the Digital Asset Frenzy · Masters in Business

• 0:02
  Speaker 1: This is Master's in Business with very rid holds on
• 0:06
  Speaker 1: Bloomberg Radio this week on the podcast what Can I Say?
• 0:11
  Speaker 1: Zeke Fox's book Number Go Up. Inside Crypto's Wild Rise
• 0:15
  Speaker 1: and Staggering Fall is just a shocking and hilarious and
• 0:21
  Speaker 1: fun read. I read it pretty quickly, in less than
• 0:25
  Speaker 1: a week, and I thought it was just fascinating. It
• 0:28
  Speaker 1: is a deep dive, a no holds barred look at
• 0:33
  Speaker 1: crypto and the many, many scams that take place across
• 0:38
  Speaker 1: everything from NFTs to icos, to hacks to bitcoin business models.
• 0:46
  Speaker 1: He is especially unhappy with Tether, which, by the way,
• 0:51
  Speaker 1: of all the scams in the book, Tether so far
• 0:54
  Speaker 1: seems to be holding up. It's really the thing that
• 0:57
  Speaker 1: pulled him into the world of crypto, and it's the
• 1:00
  Speaker 1: one that has outlasted the writing of the book. Lots
• 1:04
  Speaker 1: of other things fell apart, including FTX. I found the
• 1:08
  Speaker 1: book to be really entertaining and amusing and a little
• 1:12
  Speaker 1: bit horrifying. Parts of it are really just terrifying, But
• 1:16
  Speaker 1: Zeke is a fascinating guy. He is an award winning
• 1:19
  Speaker 1: investigative reporter for BusinessWeek and Bloomberg News. He won the
• 1:23
  Speaker 1: Lobe Award the Civil Gavel Award. He was a National
• 1:26
  Speaker 1: Magazine Award finalist. He's really an interesting guy with a
• 1:31
  Speaker 1: fascinating history, and the story of how he unraveled all
• 1:36
  Speaker 1: of the mayhem in the worlds of crypto is really
• 1:40
  Speaker 1: quite fascinating. Starting with a buddy who made a little
• 1:44
  Speaker 1: money and he just gets sucked into the netherworld of
• 1:48
  Speaker 1: everything from Luna to Tara, to Celsius, to Tether to
• 1:53
  Speaker 1: NFTs and the board Ape Yacht Club. It really is
• 1:57
  Speaker 1: just a very entertaining book, and I thought this conversation
• 2:00
  Speaker 1: was absolutely fascinating, with no further ado, my deep dive
• 2:06
  Speaker 1: into crypto with Business Weeks Zeke Fox. Normally here I
• 2:12
  Speaker 1: would say, welcome to Bloomberg. But Zeke Fox, you work
• 2:16
  Speaker 1: at Bloomberg, so welcome to the fifth floor. Let's talk
• 2:19
  Speaker 1: a little bit about your career and what led you
• 2:23
  Speaker 1: to write this book. A little background. We're recording this
• 2:26
  Speaker 1: in late October. Bitcoin touched thirty five thousand dollars. This
• 2:30
  Speaker 1: week it's settled somewhere around thirty two thousand. The FTX
• 2:34
  Speaker 1: trials are getting underway. Fun time to be covering crypto.
• 2:40
  Speaker 2: Yes, and I mean the title of the book, number
• 2:42
  Speaker 2: go up inside Crypto's wild rise and staggering fall. A
• 2:46
  Speaker 2: little bit giveaway my perspective there. I think this whole
• 2:49
  Speaker 2: thing is over and.
• 2:51
  Speaker 1: Over done, never never to rise from the ashes.
• 2:54
  Speaker 3: Sayin about it.
• 2:55
  Speaker 1: Yeah, so we'll talk more about that. We'll talk about
• 2:58
  Speaker 1: why number go up is a business mind and how
• 3:01
  Speaker 1: Crypto Winter seems to come more and more frequently. But
• 3:06
  Speaker 1: let's start a little bit with your background. Your beat
• 3:09
  Speaker 1: seems to be financial related crimes. How did you ever
• 3:12
  Speaker 1: find your way to this area of interest.
• 3:15
  Speaker 2: I don't like to say that because my job depends
• 3:18
  Speaker 2: on talking to people and getting me to tell their story.
• 3:21
  Speaker 2: So I prefer to describe it as I write profiles
• 3:24
  Speaker 2: of people who make a lot of money in an
• 3:26
  Speaker 2: interesting way. And I was drawn to that because I'm
• 3:30
  Speaker 2: somebody who plays by the rules.
• 3:32
  Speaker 3: You know.
• 3:33
  Speaker 2: I went to the school, I got pretty good grades,
• 3:36
  Speaker 2: I got a job. I've worked at Bloomberg for more
• 3:38
  Speaker 2: than a decade now. But I really like these characters
• 3:41
  Speaker 2: who are willing to take like crazy risks, and they
• 3:45
  Speaker 2: operate in great areas like loan sharks, pump and dump schemers,
• 3:50
  Speaker 2: deck collectors like I have spent my whole career writing
• 3:54
  Speaker 2: about these guys who operate on the fringes of Wall Street.
• 3:58
  Speaker 2: And I love getting to know these cares and figuring
• 4:00
  Speaker 2: out what makes them tick, because there's a lot you
• 4:03
  Speaker 2: can do if you are willing to run the risk
• 4:05
  Speaker 2: that like maybe the securities in exchange commission will suit you,
• 4:09
  Speaker 2: or like maybe you'll go to jail for a year,
• 4:11
  Speaker 2: you know, but maybe you're gonna make a lot of
• 4:13
  Speaker 2: money first.
• 4:14
  Speaker 1: Seems like a fair approach. Let's talk about how you
• 4:17
  Speaker 1: fell into crypto. It cracked me up. Your buddy Jay
• 4:20
  Speaker 1: made a bunch of money on doge coin. He's freaking
• 4:23
  Speaker 1: nostra Damis. Tell us about your conversations with Jay.
• 4:28
  Speaker 2: So I have a group text with a bunch of
• 4:31
  Speaker 2: friends from high school. We call it Dan's Basement because
• 4:34
  Speaker 2: that's where we used to hang out. And Jay is
• 4:37
  Speaker 2: a smart guy. He's a funny guy. We used to
• 4:39
  Speaker 2: write a humor call Umn together back in high school
• 4:42
  Speaker 2: in Cambridge, Massachusetts, And out of the blue, he starts
• 4:46
  Speaker 2: texting us about this thing that he calls doggy coin
• 4:50
  Speaker 2: and he.
• 4:50
  Speaker 1: Is not doge coin, doggie coin right.
• 4:53
  Speaker 2: And me, being like the know it all, you know
• 4:56
  Speaker 2: financial reporter, I tell him Jay it's call dogecoin, and
• 5:01
  Speaker 2: it's dumb. It went because this is twenty twenty, it's
• 5:03
  Speaker 2: the height of the pandemic. We're all stuck at home.
• 5:05
  Speaker 2: We're really bored.
• 5:06
  Speaker 1: Just before Elon starts tweeting about.
• 5:08
  Speaker 3: It, Yeah, it's starting to bubble up a bit.
• 5:10
  Speaker 2: I can see you here taking Jay's side in the
• 5:12
  Speaker 2: argument ahead of time, right, I mean, he is like, hey,
• 5:14
  Speaker 2: people are talking about it on Reddit, you know, let's
• 5:17
  Speaker 2: I can see this going up.
• 5:18
  Speaker 3: It's funny.
• 5:19
  Speaker 2: People everybody likes doggy coin. Get in early. And I'm
• 5:23
  Speaker 2: thinking to myself, I remember when this went sort of
• 5:26
  Speaker 2: viral a few years earlier. Already there had already been
• 5:30
  Speaker 2: a very funny segment on The Daily Show making fun
• 5:33
  Speaker 2: of crypto and doagecoin. And I'm like, it's pointless, and
• 5:36
  Speaker 2: he's like, I know it's pointless.
• 5:38
  Speaker 3: I don't care.
• 5:39
  Speaker 2: I just think it's funny. And I'm trying to argue
• 5:41
  Speaker 2: it's not funny. It won't go up. And this goes
• 5:43
  Speaker 2: on for like weeks and weeks, and it does go up,
• 5:46
  Speaker 2: and he keeps telling us about it. I'm getting kind
• 5:49
  Speaker 2: of jealous. Finally he sells out. I think he he
• 5:54
  Speaker 2: may have even called it right and sold before Elon
• 5:57
  Speaker 2: Musk hosted Saturday Night Live, which that was like a
• 6:00
  Speaker 2: you know, buy the rumor so loose moment, and he
• 6:03
  Speaker 2: went to Disney. He's sending selfie with his prosy. Yeah,
• 6:06
  Speaker 2: he made enough on on diagecoin to go to Disney.
• 6:09
  Speaker 2: He texted us, I am freaking noster Damis and I'm
• 6:12
  Speaker 2: a little I'm jealous that he made money and I didn't.
• 6:15
  Speaker 2: But more than that, I also I like being right,
• 6:18
  Speaker 2: and I think of myself as the one who knows
• 6:20
  Speaker 2: about finance and I'm an expert on pump and dump schemes, any.
• 6:25
  Speaker 1: Sort of scam or you know, fast talking salesman who
• 6:29
  Speaker 1: was gonna leave you holding the bag, right, Yeah, of
• 6:32
  Speaker 1: course you're gonna be skeptical. In fact, in the book
• 6:35
  Speaker 1: you describe bitcoin's first commercial application was silk Road. How
• 6:42
  Speaker 1: did that work out for everybody?
• 6:43
  Speaker 2: I mean it was pretty cool if you were not
• 6:46
  Speaker 2: that I did. But if you wanted to buy drugs
• 6:48
  Speaker 2: off the internet, you could just there was this new
• 6:51
  Speaker 2: magic Internet money. Just fire up your tour browser and
• 6:56
  Speaker 2: you know, send some of this new new fangled Internet
• 6:59
  Speaker 2: money to what are your LSD or whatever.
• 7:01
  Speaker 1: Actually, we're recording this October twenty twenty three. It was
• 7:05
  Speaker 1: literally a decade ago October twenty thirteen when silk Road
• 7:10
  Speaker 1: got busted, when the founder, Ross Olbright got busted, and
• 7:15
  Speaker 1: you note in the book, hey, bitcoin might have crashed,
• 7:19
  Speaker 1: but a month later it's up ten x to over
• 7:22
  Speaker 1: one thousand dollars, and that looked very suspicious.
• 7:25
  Speaker 2: Yeah, So silk Road was actually very important to the
• 7:30
  Speaker 2: early years of bitcoin. It got it on the map,
• 7:33
  Speaker 2: it got a lot of people buying. But really what
• 7:38
  Speaker 2: made bitcoin popular was not so much that it was
• 7:40
  Speaker 2: useful for anything. It was number go up. It was
• 7:44
  Speaker 2: the price going up and people seeing headlines about somebody
• 7:47
  Speaker 2: making money on bitcoin. Everybody had a friend like Jay
• 7:50
  Speaker 2: who was telling them, hey, I made some money on crypto,
• 7:53
  Speaker 2: maybe you should too, And it became hard to resist.
• 7:55
  Speaker 2: And it's interesting that in these early years there wasn't
• 7:59
  Speaker 2: much liquidity and bitcoin, and it was easy for people
• 8:03
  Speaker 2: to manipulate the prices. So since then it's come out
• 8:07
  Speaker 2: that some of the price changes that got people's attention
• 8:10
  Speaker 2: these early years may have been from manipulation.
• 8:13
  Speaker 1: A substantial portion of the volume were just various interested
• 8:19
  Speaker 1: companies trading coins back and forth with each other.
• 8:22
  Speaker 2: Yeah, I mean there's a coin called light coin, which
• 8:25
  Speaker 2: is like a Bitcoin knockoff, and its sense come out
• 8:28
  Speaker 2: that a lot of the early run up and light
• 8:30
  Speaker 2: coin that got people interested in light Cooin was the
• 8:33
  Speaker 2: result of just manipulation. But in those early years, even
• 8:38
  Speaker 2: more than today, like anything went, the Securities and Exchange
• 8:41
  Speaker 2: Commission was not following bitcoin trading closely at all.
• 8:45
  Speaker 1: And you mentioned number. Go Up is the title of
• 8:47
  Speaker 1: the book that's essentially the business model of bitcoin. It
• 8:52
  Speaker 1: will go up because it has gone up. Explain.
• 8:56
  Speaker 2: So I had resisted looking into crypto, took on the
• 9:00
  Speaker 2: assignment after this argument with Jay, and one of the
• 9:03
  Speaker 2: first places I went was Miami for Bitcoin twenty twenty one.
• 9:08
  Speaker 2: It was one of the first big conferences of pretty
• 9:11
  Speaker 2: much any kind since the COVID restrictions lifted. It was
• 9:14
  Speaker 2: like ten thousand people descended on this warehouse in the
• 9:18
  Speaker 2: Windwood district. And I'll go in kind of skeptical, but
• 9:22
  Speaker 2: also bitcoin people and crypto people are great at pr
• 9:26
  Speaker 2: and they spread this narrative that there's like this wave
• 9:29
  Speaker 2: of institutional adoption that's just around the corner. I think
• 9:33
  Speaker 2: at any time in like the last ten years, there's
• 9:35
  Speaker 2: always been the sort of sense that, oh, you've seen
• 9:37
  Speaker 2: a headline about like Blackrock or JP Morgan in Yeah,
• 9:41
  Speaker 2: the big guys are getting in on it. So I
• 9:43
  Speaker 2: go to this conference thinking, all right, I'm skeptical at crypto,
• 9:46
  Speaker 2: but I'm also sort of expecting to see regular Wall
• 9:50
  Speaker 2: Street guys there talking about financial technology in ways that
• 9:54
  Speaker 2: I can understand. Instead, on stage, I see like the
• 9:58
  Speaker 2: craziest guys that I've ever heard. People are just like screaming.
• 10:02
  Speaker 2: At that time, they were down on Elon Musk. People
• 10:05
  Speaker 2: are screaming about.
• 10:07
  Speaker 1: A tewan as kaiser from Russia television or I don't
• 10:11
  Speaker 1: know where he is today.
• 10:12
  Speaker 3: But yeah.
• 10:14
  Speaker 2: And one guy's on stage and he's talking about bitcoin
• 10:18
  Speaker 2: and he says the most important innovation in bitcoin is
• 10:22
  Speaker 2: number go up technology, and he's like, number go up
• 10:25
  Speaker 2: technology is a powerful piece of technology. It means when
• 10:29
  Speaker 2: the price goes up, more people will hear about it
• 10:31
  Speaker 2: and they'll want to buy it, and that'll make the
• 10:33
  Speaker 2: price go up some more, and then more people hear
• 10:35
  Speaker 2: about it, and then they'll buy it, and it'll go up
• 10:37
  Speaker 2: even higher, and pretty soon we'll all be rich.
• 10:41
  Speaker 1: So number go up technology sounds a lot like the
• 10:43
  Speaker 1: Greater fool theory of speculation.
• 10:46
  Speaker 2: Yeah, I mean it's it's like the logic of a
• 10:48
  Speaker 2: pyramid scheme. But for a couple of years there it
• 10:51
  Speaker 2: seemed to work, and the crypto people like to say, wag.
• 10:56
  Speaker 3: Me the w A G M I were all they
• 10:59
  Speaker 3: made it.
• 11:00
  Speaker 2: The idea was just buy, hold it, buy some more.
• 11:03
  Speaker 2: It's going to go up. As long as we don't
• 11:05
  Speaker 2: lose the faith and we keep promoting it to our friends,
• 11:08
  Speaker 2: we're all going to be rich.
• 11:09
  Speaker 1: The problem with that is at a certain point you
• 11:12
  Speaker 1: run out of people to come in and buy it.
• 11:15
  Speaker 1: This is true with every Pumpin' up scheme, every pyramid scheme,
• 11:20
  Speaker 1: and it comes out in some of the court documents
• 11:23
  Speaker 1: later that in some of the corporate slack accounts, one
• 11:28
  Speaker 1: of the people say they should be the director of
• 11:32
  Speaker 1: Ponzi economics. Tell us what is ponzi nomics?
• 11:36
  Speaker 2: This is slightly related to number go up technology. It's
• 11:40
  Speaker 2: about on that level. And some of these new coins
• 11:44
  Speaker 2: that were being started at that time would explicitly say
• 11:48
  Speaker 2: that they were adopting ponzi ish structures. And we're talking
• 11:53
  Speaker 2: about like DeFi apps. So these were like new crypto apps.
• 11:57
  Speaker 2: And what do we boil down to is that if
• 11:59
  Speaker 2: you start to doing whatever this thing was, they would
• 12:03
  Speaker 2: pay you in a new coin. And you might think, well,
• 12:06
  Speaker 2: why do I want rit Hole's coin And they'd say, well,
• 12:09
  Speaker 2: you need rit holts coin to use the rid Holt's app.
• 12:12
  Speaker 2: And it'd be like, well why do I want to
• 12:13
  Speaker 2: use the rit Holt's app And it's like, well, that's
• 12:15
  Speaker 2: how you earn more rit holes coin. Yes, it was
• 12:19
  Speaker 2: very circular, but it seemed like every couple of weeks
• 12:22
  Speaker 2: somebody was starting one of these things and it was
• 12:24
  Speaker 2: really taking off. And there was one that was got
• 12:29
  Speaker 2: very popular called step in and it's like a health
• 12:34
  Speaker 2: app on your phone. And to use the app, you
• 12:38
  Speaker 2: have to buy a virtual shoe for some reason, only
• 12:42
  Speaker 2: one shoe, I don't know, Yeah, only one. You just
• 12:45
  Speaker 2: buy one shoe. But yeah, so if you bought the
• 12:51
  Speaker 2: shoe and it costs like a thousand bucks equivalent, then
• 12:55
  Speaker 2: you could earn green Satoshi tokens. So the once you'd
• 12:59
  Speaker 2: spent your thousand bucks on the shoe, you'd better keep
• 13:01
  Speaker 2: walking every day or you're just throwing away your chance
• 13:04
  Speaker 2: to earn these valuable green satoshi tokens.
• 13:06
  Speaker 1: So it sounds like almost a legitimate business plan. We're
• 13:10
  Speaker 1: going to give you a financial incentive to exercise, and
• 13:14
  Speaker 1: it'll all take place in crypto on the blockchain, and
• 13:17
  Speaker 1: so not only are you going to get healthy, you're
• 13:20
  Speaker 1: also going to get rich. What could go wrong?
• 13:22
  Speaker 3: Right?
• 13:23
  Speaker 2: I mean, honestly, a lot of these pitches, if you
• 13:25
  Speaker 2: just heard them for a couple of minutes, they sounded
• 13:27
  Speaker 2: pretty good, not bad. Yeah, But the reality was was
• 13:31
  Speaker 2: people were that were like teams of bots planned step
• 13:34
  Speaker 2: in and it just boiled down to a pyramid and
• 13:37
  Speaker 2: they're trying to bring everyone who did step in was
• 13:40
  Speaker 2: dependent on new people wanting to do step in and
• 13:44
  Speaker 2: wanting to buy these shoes because otherwise there was no
• 13:47
  Speaker 2: use for these green satoshi tokens. And inevitably every other
• 13:51
  Speaker 2: game like this, the price crashed and shoe prices are
• 13:55
  Speaker 2: way down.
• 13:56
  Speaker 3: Yeah.
• 13:56
  Speaker 1: By the way, I found the book to be infuriated
• 14:00
  Speaker 1: and hilarious, very informative, very fun, but also serious. Lots
• 14:05
  Speaker 1: of really serious things were in it, and despite that,
• 14:09
  Speaker 1: some of the pros just really was laugh out loud.
• 14:13
  Speaker 1: What I want to do is read a couple of
• 14:16
  Speaker 1: quotes to you and get your reaction as to what's
• 14:19
  Speaker 1: going on here, and just give us a little color.
• 14:22
  Speaker 1: Starting with quote, I couldn't believe that everyday people sent
• 14:27
  Speaker 1: millions of perfectly good US dollars to the inspector gadget
• 14:32
  Speaker 1: creators Bahamian Bank in exchange for digital tokens conjured by
• 14:37
  Speaker 1: the Mighty Ducks guy and run by executives who were
• 14:41
  Speaker 1: targets of a US criminal investigation.
• 14:44
  Speaker 2: Explain, we're talking about Tether. There's a lot to unpack there,
• 14:48
  Speaker 2: and it was the first crypto company that I really
• 14:51
  Speaker 2: set out to investigate. In the regular financial world, if
• 14:55
  Speaker 2: you're investigating hedge fond of fintech company, basically, a lot
• 15:00
  Speaker 2: of times even the investigation that brings down the company,
• 15:03
  Speaker 2: the reporter just points out one red flag, like they'll
• 15:07
  Speaker 2: be like, hey, Enron, maybe what's with this off balance
• 15:10
  Speaker 2: sheet stuff. Maybe it's a bit fishy, and like that's
• 15:13
  Speaker 2: what brings down Enron right now. Tether, this is a
• 15:16
  Speaker 2: company that was like the central bank of crypto, and
• 15:19
  Speaker 2: when I started looking into it, it's it's a stable coin.
• 15:22
  Speaker 2: So they say that every Tether token is worth one dollar.
• 15:25
  Speaker 1: And there's a dollar in reserve somewhere.
• 15:27
  Speaker 2: Yeah, they're keeping a dollar in the bank for you. You
• 15:30
  Speaker 2: can always chade your token in for a real dollar.
• 15:32
  Speaker 2: So when I started looking into it, they had fifty
• 15:36
  Speaker 2: billion tether tokens. It gotten huge, and that meant they
• 15:39
  Speaker 2: were supposed to have fifty billion dollars in the bank somewhere.
• 15:42
  Speaker 1: How hard is it to show those ordited returns. It's
• 15:45
  Speaker 1: not even return on investment. Here's our fifty billion dollars.
• 15:49
  Speaker 2: Right, So they weren't saying where red flag number one,
• 15:53
  Speaker 2: Red Flag number two. One of the coin's inventors was
• 15:58
  Speaker 2: Rock Pierce, who is a child actor from The Mighty Ducks.
• 16:02
  Speaker 1: Emilio Estevez's younger self.
• 16:04
  Speaker 2: Yes, and he's in the flashback he misses this crucial
• 16:08
  Speaker 2: penalty shot that haunts coach scored in Bombay later in life.
• 16:12
  Speaker 2: This guy had had this crazy career in the dot
• 16:16
  Speaker 2: com bubble in World of Warcraft item trading, and then
• 16:20
  Speaker 2: he thought up this this Tether coin. Now he'd passed
• 16:24
  Speaker 2: on ownership to a new team, and I found that
• 16:28
  Speaker 2: the de facto boss of Tether was a former plastic
• 16:32
  Speaker 2: surgeon from Milan who had this crazy online diary where
• 16:38
  Speaker 2: he posted about his admiration, it seemed for Bernie Madoff.
• 16:43
  Speaker 1: And how does it Inspector Gadget get into this?
• 16:46
  Speaker 2: Oh yeah, we need to bring in all my favorite media.
• 16:50
  Speaker 2: So I'm looking for this fifty billion dollars. That's like
• 16:54
  Speaker 2: what gets me into crypto. I'm like, I'm the guy
• 16:56
  Speaker 2: who's gonna see if they have this fifty billion. I'm
• 16:58
  Speaker 2: going to track it down. And when I go, look,
• 17:02
  Speaker 2: the only bank that I can find that will say
• 17:05
  Speaker 2: we have any of this money is del Tech Bank
• 17:08
  Speaker 2: in the Bahamas and its chairman is Jean Schalapin. And
• 17:14
  Speaker 2: he's a French guy who got rich by creating Inspector Gadget.
• 17:19
  Speaker 1: Like really like the cartoon that kids.
• 17:22
  Speaker 2: Yes, And he's not just like the finance guy behind it,
• 17:25
  Speaker 2: Like he's the creator. Like I don't think he drew
• 17:27
  Speaker 2: the cartoons, but like he came up with the idea.
• 17:30
  Speaker 3: He was on the team.
• 17:31
  Speaker 2: This is what made him rich is that he created
• 17:33
  Speaker 2: an Inspector Gadget and then this whole cartoon company around it.
• 17:36
  Speaker 2: And he's honestly, he's like a character from James Bond movie.
• 17:40
  Speaker 2: He bought a castle with the Inspector Gadget money, right,
• 17:43
  Speaker 2: and he also bought a mansion in the Bahamas, a
• 17:47
  Speaker 2: pink colonial mansion on the beach that you can actually
• 17:50
  Speaker 2: see in a James Bond movie. In the movie, it's
• 17:52
  Speaker 2: the villain's house. He flew his own jet. He piloted it.
• 17:56
  Speaker 2: Very charming guy. And so he says, I am holding
• 18:00
  Speaker 2: some of Teather's money, and I say, okay, I'll see
• 18:02
  Speaker 2: you tomorrow in the Bahamas. So I fly down there.
• 18:06
  Speaker 2: We get to his office and when I walk in,
• 18:09
  Speaker 2: he pulls his book off the shelf. I think it's
• 18:12
  Speaker 2: called Misplaced Trust and it's about like financial schemes, and
• 18:16
  Speaker 2: he starts like sort of flipping through it and says, ah,
• 18:18
  Speaker 2: the strange things people do for money. And I'm just like, Jean,
• 18:21
  Speaker 2: are you Are you playing a character in this in
• 18:25
  Speaker 2: like a new episode of Inspector Gadget right now?
• 18:27
  Speaker 3: Like what is going on?
• 18:28
  Speaker 1: It was all foreshadowing.
• 18:30
  Speaker 3: Oh yeah.
• 18:30
  Speaker 2: But the weird thing about Tether was that they're all
• 18:33
  Speaker 2: these red flags and we didn't even mention they'd been
• 18:36
  Speaker 2: sued for fraud by the New York Attorney General, who
• 18:40
  Speaker 2: had shown that they'd lied about the reserves in the past.
• 18:42
  Speaker 2: That even John would say, I didn't know where all
• 18:44
  Speaker 2: the money was, I could only account for a portion
• 18:46
  Speaker 2: of it. So they are all these red flags enough
• 18:48
  Speaker 2: that in the traditional finance world investors would be scared off.
• 18:52
  Speaker 2: But in the crypto world, people kept trusting tether and
• 18:55
  Speaker 2: the coins still traded for a dollar, and like I
• 18:57
  Speaker 2: wrote there, people just kept sending in their real money
• 19:00
  Speaker 2: to get these tokens, and every day it's the most
• 19:03
  Speaker 2: traded crypto coin.
• 19:05
  Speaker 1: Let's go to the next quote that cracked me up.
• 19:07
  Speaker 1: You actually reference a tweet quote. Imagine if keeping your
• 19:11
  Speaker 1: car idling twenty four to seven produced solved seducos, you
• 19:17
  Speaker 1: could trade for heroin.
• 19:18
  Speaker 3: Explain love this tweet.
• 19:20
  Speaker 2: It's a great explanation of bitcoin, which in the bitcoin
• 19:25
  Speaker 2: mining process very power hungry. Yes, I mean, by some estimates,
• 19:30
  Speaker 2: bitcoin mining uses more energy than the whole country of Argentina.
• 19:36
  Speaker 2: And it's just like warehouses of these computers running around
• 19:40
  Speaker 2: the clock. And I was surprised to learn that there's
• 19:43
  Speaker 2: not really they're not really doing anything that's crucial to
• 19:46
  Speaker 2: the bitcoin network. They're just playing sort of this guessing
• 19:49
  Speaker 2: game that makes it difficult for anyone to hack bitcoin
• 19:53
  Speaker 2: and steal all the bitcoins. But it just uses this
• 19:55
  Speaker 2: insane amount of energy.
• 19:56
  Speaker 1: H here's one of my favorites, quote all my Apes Gone.
• 20:02
  Speaker 1: Tell us a little bit about your experience purchasing a
• 20:05
  Speaker 1: mutant ape n f T.
• 20:07
  Speaker 2: I got a lot of criticism from crypto guys as
• 20:10
  Speaker 2: I was researching this book, and they would say, how
• 20:12
  Speaker 2: are you writing about crypto if you don't have any
• 20:15
  Speaker 2: crypto And I would tell them, well, listen, first of all,
• 20:20
  Speaker 2: as a reporter, I'm not supposed to invest in anything.
• 20:22
  Speaker 1: I was told to ask you how much money have
• 20:24
  Speaker 1: you made shorting bitcoin? And the answer is, yeah, nothing.
• 20:28
  Speaker 1: You're not allowed to, right, yeah.
• 20:31
  Speaker 2: And the big the crypto people would say, actually, even
• 20:34
  Speaker 2: that policy introduces some bias because you're invested in standard
• 20:38
  Speaker 2: stock market funds and so you're sort of against crypto,
• 20:42
  Speaker 2: and how you don't know, you don't know about this.
• 20:44
  Speaker 3: You got to try it out.
• 20:45
  Speaker 2: And so eventually they kind of got to me and
• 20:47
  Speaker 2: I was like, you know what, I tried out step in.
• 20:50
  Speaker 2: I got a shoe. It had it was in the
• 20:54
  Speaker 2: middle of collapse by the time I bought a shoe,
• 20:57
  Speaker 2: but that that didn't do much for me.
• 20:58
  Speaker 1: So your poor wife, so you spend a couple hundred
• 21:01
  Speaker 1: bucks on a shoe. You spend twenty thousand dollars on
• 21:05
  Speaker 1: a mutant ape that fortunately you sold for almost all
• 21:08
  Speaker 1: your money back.
• 21:10
  Speaker 2: Yeah, I decided to try it out, and I was like,
• 21:12
  Speaker 2: I'm going straight for the top. I want to join
• 21:14
  Speaker 2: the board Ape yacht Club. Right, that's the crypto thing
• 21:17
  Speaker 2: that the celebrities are doing.
• 21:18
  Speaker 1: But those are hundreds of thousands of dollars.
• 21:20
  Speaker 2: Yeah, this is like a cartoon of a monkey, is
• 21:23
  Speaker 2: a very ugly cartoon. They were going for like five
• 21:27
  Speaker 2: hundred grand, and they were having a party in New
• 21:30
  Speaker 2: York called Apefest. You had to have one to go,
• 21:32
  Speaker 2: and I found out you could still get in if
• 21:35
  Speaker 2: you got a mutant ape, which is still it's like
• 21:37
  Speaker 2: the ugly cousin of the board Ap.
• 21:39
  Speaker 1: And a much more reasonable twenty thousand dollars.
• 21:43
  Speaker 2: Yes, So when I asked my wife and she very
• 21:46
  Speaker 2: nicely said, yes, they're actually going for forty.
• 21:48
  Speaker 1: When I asked her, right, and good news, honey, it's collapsing.
• 21:51
  Speaker 1: It'll only cost us twenty.
• 21:54
  Speaker 2: I was happy that I hitd a collapse, but I
• 21:55
  Speaker 2: was also like, wait, so if it went from forty
• 21:58
  Speaker 2: to twenty and like two, is it gonna go to ten,
• 22:03
  Speaker 2: and I was like, please do not go to ten.
• 22:04
  Speaker 2: But even more than it going to ten, my fear
• 22:07
  Speaker 2: was does all my apes gone?
• 22:09
  Speaker 3: Thing?
• 22:09
  Speaker 2: Because it actually I learned a lot from buying the
• 22:13
  Speaker 2: board ape. Because if a lot of people who even
• 22:16
  Speaker 2: if you are sort of into crypto, maybe you have
• 22:18
  Speaker 2: some bitcoin, you have some ethereum, you probably just do
• 22:20
  Speaker 2: it on coinbase or robinhood or whatever. You're not actually
• 22:25
  Speaker 2: like using the blockchain, right, Like.
• 22:27
  Speaker 1: But to get the NFTs you have to go through
• 22:30
  Speaker 1: the blockchain, and it's a horrific arduous process.
• 22:34
  Speaker 2: Yes, I mean i'd heard it would be bad. You know,
• 22:36
  Speaker 2: my expectations were low, but then I went to go
• 22:38
  Speaker 2: do it and I was like, oh my god, Like
• 22:41
  Speaker 2: no one normal will do this. I'll get like just
• 22:43
  Speaker 2: it boils down to your money lives. Like you know,
• 22:46
  Speaker 2: where you put the URL in your web browser. You
• 22:49
  Speaker 2: might type in Google and then maybe you have like
• 22:51
  Speaker 2: a little red stop sign if you have ad block.
• 22:54
  Speaker 2: Now maybe next to it, how would you like to
• 22:57
  Speaker 2: add a picture of a foxhead? And that's where your money's.
• 23:00
  Speaker 1: You're on a Chrome extent, yes, And like before.
• 23:03
  Speaker 2: You install it, they make you watch this video and
• 23:05
  Speaker 2: it says, welcome to the wonderful world of crypto. Now,
• 23:08
  Speaker 2: please engrave your twelve word password on a piece of
• 23:12
  Speaker 2: metal and bury it in your backyard. And which I
• 23:16
  Speaker 2: did not do, but I just the process of getting
• 23:18
  Speaker 2: my twenty thousand dollars into this fox head so that
• 23:22
  Speaker 2: I could waste it on this mute ape was so
• 23:25
  Speaker 2: horrible that I was just like, this is a huge
• 23:27
  Speaker 2: obstacle the crypto ever taking off. No one normal is
• 23:30
  Speaker 2: gonna do this unless they think they're gonna get rich.
• 23:34
  Speaker 1: And tell us who said all my apes gone?
• 23:37
  Speaker 2: So once you got the apes, you gotta watch out
• 23:40
  Speaker 2: because you're gonna get hacked. They might get stolen. And
• 23:42
  Speaker 2: there was a art dealer who actually got hacked and
• 23:47
  Speaker 2: two million dollars of NFTs was stolen from him, right,
• 23:50
  Speaker 2: and he tweeted mid hack all my apes Gone, the
• 23:54
  Speaker 2: status tweet in all of crypto.
• 23:56
  Speaker 1: The saddest tweet in all of crypto. So let's talk
• 23:59
  Speaker 1: a little bit about Axie Infinity is a massive multiplayer
• 24:04
  Speaker 1: online game, and this quote is just bonkers. Crypto Bros.
• 24:11
  Speaker 1: And Silicon Valley vcs gave Filipinos false hope by promoting
• 24:17
  Speaker 1: an unstable bubble based on a Pokemon knockoff as the
• 24:23
  Speaker 1: quote future of work unquote, making matters worse, North Korean
• 24:29
  Speaker 1: hackers broke into the crypto exchange affiliated with the game
• 24:32
  Speaker 1: made off with six hundred million dollars worth of stable
• 24:35
  Speaker 1: coins and ether. The heist helped Kim Jehan un pay
• 24:39
  Speaker 1: for test launches of ballistic missiles. Instead of providing a
• 24:43
  Speaker 1: new way for poor people to earn cash, Axie Infinity
• 24:48
  Speaker 1: funneled their savings to a dictator's weapons program. I mean,
• 24:53
  Speaker 1: that is just a beautiful paragraph. So first off, I
• 24:57
  Speaker 1: love the pros, but second, what a horrible story.
• 25:01
  Speaker 2: Yes, and like I'm not making that up. Like the
• 25:04
  Speaker 2: US government has said, North Korea's nuclear program is partly
• 25:09
  Speaker 2: funded from hacking this Pokemon knockoff game.
• 25:12
  Speaker 3: And this was game AXI.
• 25:15
  Speaker 2: The crypto guys when it was going well, they love
• 25:17
  Speaker 2: to talk about it. This was their number one example
• 25:20
  Speaker 2: of Web three. You had to buy a team of monsters.
• 25:24
  Speaker 2: It was a game you played on your phone. You
• 25:26
  Speaker 2: had to buy the monsters before you could play, and
• 25:29
  Speaker 2: then you when you battled, you earned smooth love potions.
• 25:33
  Speaker 2: And it had the same circular logic where you needed
• 25:36
  Speaker 2: the potions to get more monsters. Why do you want
• 25:39
  Speaker 2: monsters well to get the potions? Why do you want
• 25:41
  Speaker 2: the potions to get monsters?
• 25:43
  Speaker 3: You know? But it was going.
• 25:44
  Speaker 2: Great for a while, and more than a million people
• 25:48
  Speaker 2: in the Philippines started playing. I went there to check
• 25:51
  Speaker 2: it out. I mean, even my driver had taken out
• 25:54
  Speaker 2: a loan for something like a thousand bucks to buy
• 25:57
  Speaker 2: a team of monsters, and it had lost it. For
• 25:59
  Speaker 2: these people who took out loans to get in on it,
• 26:02
  Speaker 2: it had been a real setback in their life. You know,
• 26:05
  Speaker 2: this was no joke to them. It's not like just
• 26:07
  Speaker 2: their pocket.
• 26:08
  Speaker 1: Money, serious serious damage. Here's could be my favorite Sam
• 26:12
  Speaker 1: Bankman Freed quote quote. It's like the narrative would be
• 26:15
  Speaker 1: sexier if it was like, holy, this is the world's
• 26:19
  Speaker 1: biggest Ponzi scheme, right.
• 26:21
  Speaker 3: Yeah.
• 26:22
  Speaker 2: So I spent a lot of time with Sam Bankman
• 26:25
  Speaker 2: Freed in reporting this book because it was clear he
• 26:27
  Speaker 2: was a major player in crypto, and it was actually
• 26:30
  Speaker 2: very fun. When I went to go write the book,
• 26:33
  Speaker 2: FTX had collapsed, and some of his quotes like that
• 26:36
  Speaker 2: one took on some new meaning and I'm like, was
• 26:39
  Speaker 2: this guy just toying with me? While he was giving
• 26:41
  Speaker 2: this interview.
• 26:42
  Speaker 1: That's hilarious. And then on the FTX bankruptcy, this could
• 26:46
  Speaker 1: be my favorite quote in the whole book. The shocking
• 26:49
  Speaker 1: reversal was the biggest news crypto had ever seen. It
• 26:53
  Speaker 1: was as if Sutoshi Nakamoto's identity was finally revealed and
• 26:58
  Speaker 1: it was Janet Yellen, the central banker hated by bitcoiners.
• 27:03
  Speaker 1: That's just a hilarious sentence. I mean, it's so great.
• 27:07
  Speaker 1: Everybody thought FTX was the most legitimate entity in all crypto,
• 27:13
  Speaker 1: turns out not so much.
• 27:15
  Speaker 2: Yeah, and I will admit I also thought I was
• 27:19
  Speaker 2: skeptical of crypto, but I thought I thought, hey, FTX
• 27:22
  Speaker 2: is a casino for cryptocurrencies. They're encouraging people to gamble there.
• 27:26
  Speaker 2: People will probably lose their money. I did not suspect
• 27:30
  Speaker 2: that Sam Bankman Freed was stealing all the money out
• 27:32
  Speaker 2: of the back of the casino.
• 27:34
  Speaker 1: So let's talk about some of the things that happened
• 27:37
  Speaker 1: after FTX collapsed. Here's a quote. The past two years
• 27:42
  Speaker 1: have felt like this perpetual gaslighting of anyone who expresses caution.
• 27:48
  Speaker 1: Now it's all unraveling very quickly. That's from Twitter. Someone
• 27:53
  Speaker 1: called bitfinext tell us a little bit about him and
• 27:57
  Speaker 1: what his role was.
• 27:58
  Speaker 2: So bitfin next has been tweeting about his skepticism of
• 28:03
  Speaker 2: crypto and especially tether for years and years now, a.
• 28:07
  Speaker 1: Long like seven eight years yea since it was formed.
• 28:10
  Speaker 2: Yeah, dozens of times a day. And he seemed to
• 28:14
  Speaker 2: have some pretty like sometimes he tweet photos or things.
• 28:17
  Speaker 2: It seemed like he was an insider. And I arranged
• 28:20
  Speaker 2: to meet him, and what I realized when I met
• 28:24
  Speaker 2: him was, oh, no, this is like a dude who
• 28:27
  Speaker 2: lives in his mom's basement.
• 28:31
  Speaker 1: But turns out to be pretty insightful as to what's
• 28:34
  Speaker 1: going on.
• 28:35
  Speaker 3: You know, his like me.
• 28:36
  Speaker 2: We both started out looking at tether, and it's turned
• 28:39
  Speaker 2: out that Tether has held up pretty well. Has actually
• 28:42
  Speaker 2: only grown since I started investigating it. It's up to
• 28:45
  Speaker 2: eighty four billion now.
• 28:46
  Speaker 1: It really is crazy. Let me run through a few
• 28:50
  Speaker 1: a few more quotes that just cracked me up. First,
• 28:53
  Speaker 1: did Peter Teel really col Warren Buffett a sociopathic grandpa
• 28:58
  Speaker 1: for doubting Bitcoin?
• 29:00
  Speaker 3: Yes?
• 29:00
  Speaker 2: That was at Bitcoin twenty twenty two in Miami. He
• 29:04
  Speaker 2: played the like Max Kaiser, role of the guy who
• 29:06
  Speaker 2: yelled the craziest stuff on stage.
• 29:08
  Speaker 1: Right, But at the same time you revealed that he
• 29:12
  Speaker 1: was secretly dumping all his crypto or not so secretly,
• 29:15
  Speaker 1: because you could track all this on the blockchain.
• 29:17
  Speaker 2: Yeah, his fund had had sold crypto and it only
• 29:21
  Speaker 2: came out after that speech, right.
• 29:23
  Speaker 1: A little misleading. There were a couple of other people
• 29:27
  Speaker 1: that you reference that I too, in particular. I just
• 29:30
  Speaker 1: have to ask about first Michael Sailor at micro Strategy.
• 29:35
  Speaker 1: My memory of micro Strategy when I was on a
• 29:39
  Speaker 1: trading desk was somebody had released what was a false,
• 29:44
  Speaker 1: a fake press release when micro Strategy was like, I
• 29:47
  Speaker 1: don't know, a buck fifty some crazy price, and it
• 29:50
  Speaker 1: plummets on this news it's halted, and then the company
• 29:54
  Speaker 1: comes out and says this isn't a real news release.
• 29:57
  Speaker 1: Somebody who's a former employee and reopens and it climbs
• 30:02
  Speaker 1: like two thirds of the way back. But a crazy,
• 30:04
  Speaker 1: crazy history. Michael Sailor, recently CEO of the company, becomes
• 30:11
  Speaker 1: a bitcoin maximalist and says, quote, I just hope I
• 30:16
  Speaker 1: don't get up one day and have to look at
• 30:18
  Speaker 1: myself in the mirror and say you had fifteen billion
• 30:21
  Speaker 1: dollars and you blew it all there's the guy who
• 30:24
  Speaker 1: flushed fifteen billion dollars down the toilet. Soon after he
• 30:28
  Speaker 1: loses thirteen and a half billion dollars. What was that about?
• 30:33
  Speaker 2: Sailor said that to The New Yorker in an amazing
• 30:37
  Speaker 2: profile about his dot com riches. He's the biggest loser
• 30:41
  Speaker 2: of the dot com bubble. But micro Strategy plugs along, and.
• 30:46
  Speaker 1: They had some real technology, some software.
• 30:48
  Speaker 3: Right.
• 30:48
  Speaker 2: It was like a real company that was making a
• 30:50
  Speaker 2: decent amount of money. And in recent years he's changed
• 30:54
  Speaker 2: the company to be all about bitcoin. He sunk all
• 30:57
  Speaker 2: the profits into bitcoin. He's levered up in orrowed money
• 31:00
  Speaker 2: and bought bitcoin. So now if you want to invest
• 31:03
  Speaker 2: in micro Strategy stock, it's just a bet on bitcoin.
• 31:06
  Speaker 2: And he's also become like the craziest bitcoin maximalist out there.
• 31:11
  Speaker 2: Who these are the guys who are like the priests
• 31:14
  Speaker 2: of the Bitcoin church, And he says things like bitcoin
• 31:17
  Speaker 2: is a flock of cyber hornets stinging the financial system
• 31:21
  Speaker 2: to death. Honestly, the real quote is crazier than that.
• 31:24
  Speaker 2: But it's people like him that are really They actually
• 31:27
  Speaker 2: are key to bringing in new people into this bitcoin world.
• 31:30
  Speaker 2: And it's actually why I would hesitate to bet against
• 31:33
  Speaker 2: bitcoin because it's become this cult and the people who
• 31:37
  Speaker 2: love it just love it so so so much.
• 31:39
  Speaker 1: Right, It's definitely has cult like aspects. You also take
• 31:43
  Speaker 1: a swing at the mooch at Anthony Scaramucci. Scaramucci fifty eight,
• 31:47
  Speaker 1: looking tanned and botox smooth, wearing a well fitted suit,
• 31:52
  Speaker 1: his pompadour freshly die jet black. Now I know the Mooch.
• 31:56
  Speaker 1: He's a good guy, good enough guy, botox and and
• 32:00
  Speaker 1: hair dye. Is that true?
• 32:02
  Speaker 2: So the book was thoroughly fact checked and not only
• 32:07
  Speaker 2: did the Mooch confirm that, I believe that that was
• 32:10
  Speaker 2: if I remember correctly, he announced this at this event.
• 32:13
  Speaker 1: Oh he did.
• 32:14
  Speaker 3: Oh, he was like, check out my hair. I got
• 32:16
  Speaker 3: a name.
• 32:17
  Speaker 1: He likes to say, this is a BRIONI shoot, these
• 32:19
  Speaker 1: are Ferragamos on my feet. Like he definitely drops brand
• 32:23
  Speaker 1: names on a regular.
• 32:24
  Speaker 2: We were at Crypto Bahama's, the big conference to celebrate
• 32:28
  Speaker 2: the success of Sam Bankman Freed. He had just made
• 32:31
  Speaker 2: this partnership with FTX, and the Mooch loves a press conference. Sure,
• 32:35
  Speaker 2: so he called. There were a lot of reporters there
• 32:37
  Speaker 2: at the conference, and he had this sort of press
• 32:39
  Speaker 2: conference at the beginning, but it seemed like, I mean,
• 32:41
  Speaker 2: the only thing he wanted to talk is he just
• 32:44
  Speaker 2: kept talking about how good he looked and how bad
• 32:46
  Speaker 2: Sam Bankman Freed looked. I was like, the point of
• 32:48
  Speaker 2: the press conference, I.
• 32:49
  Speaker 1: Forgot where I read that before the book. But all
• 32:52
  Speaker 1: he talked about is that. Maybe that's where the Brioni
• 32:55
  Speaker 1: suit came up.
• 32:55
  Speaker 2: Yeah, I mean that was sort of Sam Bankman's Freed thing.
• 32:59
  Speaker 2: It was this thing is I don't dress up for anybody.
• 33:01
  Speaker 2: Congress he would, uh, he put on a suit, although
• 33:03
  Speaker 2: he didn't tie his shoes famously, but at this conference,
• 33:08
  Speaker 2: the mooch look I mean, he looked great. Bankman Freed
• 33:10
  Speaker 2: was wearing you know, khaki shorts and a T shirt,
• 33:12
  Speaker 2: his hair all messed up, even when he was on
• 33:14
  Speaker 2: stage with Bill Clinton, Tony Blair, Tom Brady.
• 33:20
  Speaker 3: Yeah.
• 33:21
  Speaker 1: By the way, there's a famous photo. You have it
• 33:22
  Speaker 1: in the book of Sam Bakman Fried and Gizelle, and
• 33:26
  Speaker 1: you look at him and go, these aren't representatives of
• 33:29
  Speaker 1: the same species. These are two completely different life forms.
• 33:34
  Speaker 2: I love that photo because it must have been taken
• 33:37
  Speaker 2: backstage before they went out to speak at this conference,
• 33:40
  Speaker 2: and Sam just looks like a deer in the headlights,
• 33:43
  Speaker 2: like the flash has caught him off guard, and Gazelle like,
• 33:46
  Speaker 2: you're never gonna catch her off.
• 33:47
  Speaker 3: She's great, and also he's a.
• 33:49
  Speaker 2: Professional's absolutely, but they posed for an ad campaign together
• 33:54
  Speaker 2: that ran in like classy magazines like The New Yorker.
• 33:57
  Speaker 1: He didn't look much better in those acts either, Right,
• 33:59
  Speaker 1: It's it's the same sort of disheveled. I mean, I
• 34:03
  Speaker 1: guess that was part of the whole Mit Genius rap.
• 34:06
  Speaker 2: I will say this, it kind of worked on me.
• 34:09
  Speaker 2: It was like, I'm authentic, I don't care. I'm being myself.
• 34:12
  Speaker 2: I'm not gonna pretend. He didn't come off like this
• 34:15
  Speaker 2: slick salesman. He was like, I'm just the guy who
• 34:18
  Speaker 2: you know, spends all my time thinking about how to
• 34:21
  Speaker 2: make money trading crypto. I went down to shadow him
• 34:26
  Speaker 2: at his office when things were going great, and I
• 34:28
  Speaker 2: was just like, I'm not leaving untill he falls asleep
• 34:30
  Speaker 2: on that bean bag. I want to see him nap
• 34:32
  Speaker 2: on the bean bag. And he did, and he he
• 34:34
  Speaker 2: slept there for a couple hours, and he at one
• 34:37
  Speaker 2: point he woke up a little bit opened a package
• 34:40
  Speaker 2: of Nutter butters, ate them and kind of made a
• 34:42
  Speaker 2: mess on the beedback and then went back to sleep
• 34:44
  Speaker 2: because I had like one last question for him, and
• 34:46
  Speaker 2: I was like, I'm not gonna disturb his nap. So
• 34:49
  Speaker 2: he got those nutter butters. I was like, now's my chance.
• 34:51
  Speaker 2: Oh nope, back to sleep.
• 34:52
  Speaker 1: By the way, I see where the unior in the
• 34:54
  Speaker 1: book comes from. It's basically how you see the world.
• 34:56
  Speaker 1: It's really very funny. You start with the Tether web
• 35:00
  Speaker 1: site and you go through the various disclosures, including the
• 35:04
  Speaker 1: list of risks. The company could go bankrupt, bank holdings
• 35:07
  Speaker 1: could lose money, the government could confiscate its assets, and
• 35:12
  Speaker 1: then you notice what seems like a risk disclosure red flag,
• 35:17
  Speaker 1: or we could abscond with the reserve funds. What is
• 35:21
  Speaker 1: the thinking there, Hey, if we ever get prosecuted for
• 35:25
  Speaker 1: stealing money, we could always say, oh no, that was
• 35:28
  Speaker 1: a risk we disclosed upfront.
• 35:30
  Speaker 2: I mean, look at Sam beigman Fried. He's trying to
• 35:32
  Speaker 2: use the terms of service of FTX as a defense
• 35:35
  Speaker 2: now and basically trying to argue that they allowed him
• 35:39
  Speaker 2: to lend all the customer money to his hedge fund.
• 35:41
  Speaker 2: So you know, you never know what maybe it could
• 35:44
  Speaker 2: come in handy one day.
• 35:45
  Speaker 1: So early on you actually asked SBF about tether. FTX
• 35:49
  Speaker 1: has wired lots of money through three different jurisdictions and
• 35:54
  Speaker 1: intermediary banks to move US dollars to tether. What ftx's
• 36:00
  Speaker 1: relationship to the stable coin.
• 36:03
  Speaker 2: I met SBF because I wanted to ask him about tether.
• 36:07
  Speaker 2: They were one of the biggest users of tether. Something
• 36:11
  Speaker 2: like thirty five billion of tether passed through wow them. Now,
• 36:16
  Speaker 2: what I've learned more recently is that a lot of
• 36:19
  Speaker 2: that came because there was actually in the during the
• 36:22
  Speaker 2: crypto boom, there was demand for There was so much
• 36:25
  Speaker 2: demand for tether that on exchanges like FTX it often
• 36:28
  Speaker 2: traded slightly above a dollar. And so Alameda, his hedge fund,
• 36:34
  Speaker 2: could buy tethers. They had a relationship with Tether, the company.
• 36:37
  Speaker 2: They could buy tethers for a dollar and then go
• 36:40
  Speaker 2: sell them for a little bit more. The profits are
• 36:43
  Speaker 2: very small, but Alameda's cost of capital was very low since.
• 36:46
  Speaker 1: They were borrowing all the customer money. Right, So a
• 36:49
  Speaker 1: zero cost to capital one percent a day is real money.
• 36:52
  Speaker 1: It adds up.
• 36:53
  Speaker 2: Yeah, even if it was like a tenth of a percent,
• 36:55
  Speaker 2: they could do it, So I think that accounts for
• 36:57
  Speaker 2: why they were using so much Tether. He did not
• 37:00
  Speaker 2: disclose that at the time. If you think of all
• 37:02
  Speaker 2: the crypto exchanges, like different casinos, Tether is basically like
• 37:06
  Speaker 2: the cashier, and it's like in the early years of crypto,
• 37:10
  Speaker 2: these casinos had trouble receiving dollars, like banks did not
• 37:14
  Speaker 2: want to open bank accounts for crypto companies. So instead
• 37:18
  Speaker 2: the crypto companies would say, hey, customers, go to Tether,
• 37:22
  Speaker 2: send them some real money, get some Tether tokens. Then
• 37:25
  Speaker 2: you can bring them over here and gamble with them.
• 37:27
  Speaker 1: So what was supposed to be disintermediation became additional media.
• 37:32
  Speaker 1: You need to had another middleman in the way.
• 37:35
  Speaker 2: Right, Crypto is always sold as trustless, and in reality
• 37:40
  Speaker 2: it turns out you keep having to trust these people
• 37:42
  Speaker 2: who prove themselves to be totally untrustworthy.
• 37:46
  Speaker 1: So tell us a little bit about the leadership of Tether.
• 37:49
  Speaker 1: Who was the founder and who was the CEO.
• 37:51
  Speaker 2: One of the co founders was this the Mighty duckskuy
• 37:54
  Speaker 2: Brock Pierce, and I had a lot of fun meeting
• 37:58
  Speaker 2: him on his mega yacht off the coast of the Bahamas.
• 38:02
  Speaker 2: He sent a speedboat to pick me up. So you know,
• 38:05
  Speaker 2: I don't know how often that's gonna happen in my
• 38:07
  Speaker 2: journalistic career.
• 38:09
  Speaker 3: But in the.
• 38:10
  Speaker 2: CEO was this guy, Jean Louis Vanderveld, and we also
• 38:18
  Speaker 2: met in the Bahamas. The meeting was broken by Jean Chalapin,
• 38:22
  Speaker 2: the inspector gadget guy. So I'd gotten to the Bahamas
• 38:26
  Speaker 2: hoping that I would meet one of these Tether guys,
• 38:29
  Speaker 2: and I didn't see any of them there, even though
• 38:31
  Speaker 2: it was a big crypto conference. I thought they'd come.
• 38:33
  Speaker 2: But then finally Charalapin is like, get over here. JL
• 38:37
  Speaker 2: is he Vandervelt's here, and I see this tall Dutch
• 38:42
  Speaker 2: guy with silver hair, kind of a funny scar on
• 38:45
  Speaker 2: his nose. And Jean introduces me and he's like, Zeke,
• 38:49
  Speaker 2: if you screw this up, I'll kill you, really with
• 38:53
  Speaker 2: a smile like he's not killing me, but a good line.
• 38:56
  Speaker 3: I appreciated it.
• 38:57
  Speaker 2: So this guy JL, he's the CEO of one of
• 38:59
  Speaker 2: the biggest company and crypto. Most people in crypto love
• 39:02
  Speaker 2: to promote themselves. The skeptics like this guy bit the
• 39:04
  Speaker 2: next would say that there was so little out there
• 39:07
  Speaker 2: about JL. They were like, we don't even think he's
• 39:10
  Speaker 2: a real person. So I go to shake jl Vanderveld,
• 39:13
  Speaker 2: the CEO of Teather's hand, and I'm like, nice to meet,
• 39:17
  Speaker 2: and then he says the man who doesn't exist.
• 39:20
  Speaker 3: I'm like, wow, I just love these guys.
• 39:23
  Speaker 1: These guys, they're full bond villains. They're playing right into
• 39:26
  Speaker 1: the carriage.
• 39:26
  Speaker 3: Yeah, and we had we had a lot.
• 39:29
  Speaker 2: We spent hours talking in the casino, me and Jail
• 39:32
  Speaker 2: and had a conversation another conversation. I was very funny
• 39:35
  Speaker 2: in hindsight. I was telling him. I was like, listen, man,
• 39:39
  Speaker 2: I just spent a couple of days at Sam bankman
• 39:41
  Speaker 2: Fried's office. That guy doesn't have anything to hide. He
• 39:45
  Speaker 2: just let me see walk around the whole office and
• 39:47
  Speaker 2: see everything. Yeah, how come you're being so secret? And
• 39:50
  Speaker 2: then he wasn't like he totally bought into it. And
• 39:54
  Speaker 2: he was like, well, it's easy for Sam bankman Freed.
• 39:56
  Speaker 2: You know, he started his company more recently. You know, Tether,
• 40:00
  Speaker 2: we had a sketchy passed.
• 40:02
  Speaker 3: Yeah.
• 40:02
  Speaker 2: I mean He's basically like, there's stuff in our past
• 40:04
  Speaker 2: that we can't reveal for the record.
• 40:06
  Speaker 1: As we're recording this, Tether's trading at still a dollar.
• 40:10
  Speaker 1: The point it's a dollar and here you reference this
• 40:14
  Speaker 1: in the book. But their business model, now, with FED
• 40:18
  Speaker 1: funds over five percent, you could get riskless treasuries just
• 40:22
  Speaker 1: about five percent. Their business model is collect eighty five
• 40:26
  Speaker 1: billion dollars, put it in riskless treasuries. Hey, you're gonna
• 40:31
  Speaker 1: get a billion dollars a quarter for doing almost nothing.
• 40:34
  Speaker 1: That's not a bad business model.
• 40:36
  Speaker 2: So when I started looking into Tether, interest rates were zero,
• 40:40
  Speaker 2: and so Tyther was sitting on this huge pile of
• 40:42
  Speaker 2: money and they had incentive to put it at risk
• 40:45
  Speaker 2: because they needed to earn interest something. So that was
• 40:48
  Speaker 2: another reason to be suspicious of them. I found evidence
• 40:51
  Speaker 2: they'd invested in Chinese commercial paper, They'd been making loans
• 40:55
  Speaker 2: to other crypto companies. It seemed like not riskless, but now, yeah,
• 41:00
  Speaker 2: you just put it in treasuries earned five percent. They're
• 41:03
  Speaker 2: if you believe their numbers, they're one of the most
• 41:05
  Speaker 2: profitable companies in the world. It's a shoe string operation.
• 41:09
  Speaker 1: Assuming they have all eighty four billion dollars or eighty
• 41:12
  Speaker 1: five billion dollars accounted for free money to them. Now
• 41:16
  Speaker 1: that you're getting a yield, they really don't have to
• 41:18
  Speaker 1: do anything other than not get hacked.
• 41:20
  Speaker 2: Yes, I mean, which, to be fair, they have. They
• 41:23
  Speaker 2: were the victims of one of the biggest tacks ever,
• 41:26
  Speaker 2: so I don't know if they're that trustworthy on that front.
• 41:28
  Speaker 2: But yeah, even if let's say, just hypothetically, let's say
• 41:32
  Speaker 2: they had been a billion dollars in the hole, they
• 41:35
  Speaker 2: could easily earn their way out of it now the interest.
• 41:37
  Speaker 1: Rates are higher, right, very easily. Let's talk about some
• 41:40
  Speaker 1: of the other players in both crypto and stable coins.
• 41:45
  Speaker 1: Binance founder Chang Peng Zau, better known as cz is
• 41:49
  Speaker 1: he now the richest man in crypto.
• 41:53
  Speaker 3: He's got to be.
• 41:54
  Speaker 2: It's down to him and Justin Sun from the tron blockchain.
• 41:59
  Speaker 2: Both of them show a notable reluctance to enter us
• 42:04
  Speaker 2: soil g Yeah. Sun's been sued by the SEC and financed,
• 42:11
  Speaker 2: has a number of cases. These guys do still have
• 42:15
  Speaker 2: a ton of money. And when I went down to
• 42:17
  Speaker 2: the Bahamas after FTX failed and I was with Sam
• 42:22
  Speaker 2: Bankman freed. When he just before he got arrested, he
• 42:24
  Speaker 2: was still.
• 42:25
  Speaker 1: Thinking, how do I get myself here?
• 42:27
  Speaker 2: Yeah, I gotta bail myself out. I need to find
• 42:29
  Speaker 2: someone to give me five ten billion dollars so I
• 42:31
  Speaker 2: can get FTX going again.
• 42:33
  Speaker 1: Pocket change walking around cast so.
• 42:35
  Speaker 2: But it was interesting to me was I was like, so,
• 42:38
  Speaker 2: who's got five ten billion dollars? He'd already tried CZ.
• 42:41
  Speaker 1: That didn't worry And from the book it's pretty clear
• 42:43
  Speaker 1: CZ is the one who's stuck the knife in.
• 42:46
  Speaker 2: Oh yeah, you can't really blame CZ because I mean,
• 42:49
  Speaker 2: fraud is a fraud, you know if he but he's
• 42:52
  Speaker 2: the one who made a tweet that got people started
• 42:56
  Speaker 2: starting to pull their money out of FTX, which revealed
• 42:59
  Speaker 2: the hole at the sun of the exchange. But the
• 43:02
  Speaker 2: other people bankman Fried said had five ten billion dollars
• 43:05
  Speaker 2: were tether. They said, no, we're not bailing you out.
• 43:08
  Speaker 2: And this guy, Justin's son who has this coin tron
• 43:12
  Speaker 2: and is like a crazy character in himself. Missing chapter
• 43:15
  Speaker 2: from the book.
• 43:17
  Speaker 1: Let's talk about Celsius and is it Alex Mishinski another
• 43:21
  Speaker 1: stable coin, right, he.
• 43:23
  Speaker 2: Had a kind of Celsius was like a crypto bank,
• 43:27
  Speaker 2: and he was saying, send me your stable coins.
• 43:29
  Speaker 3: I'll pay you interest on them.
• 43:31
  Speaker 2: We met at Bitcoin twenty twenty one, my first crypto conference,
• 43:35
  Speaker 2: and I was there I wanted to gather info on Tether.
• 43:37
  Speaker 2: Celsius had done business with Tether, so I set up
• 43:40
  Speaker 2: a meeting with this guy, Mishinsky. He was a big hustler.
• 43:44
  Speaker 2: He was at every conference. He was the one giving
• 43:45
  Speaker 2: all the speeches. He always wore this t shirt that
• 43:48
  Speaker 2: said banks are not your friends. We sit down, he
• 43:51
  Speaker 2: told me his I asked. I'm polite, so before i
• 43:53
  Speaker 2: get to like the the investigative questions, I'm like, so,
• 43:57
  Speaker 2: what's your company do? And he's like, well, it's sort
• 44:00
  Speaker 2: of like a bank. Give us your coins, we'll pay
• 44:02
  Speaker 2: you up to eighteen percent interest, but if you want
• 44:05
  Speaker 2: a loan, we'll give that to you for free, like
• 44:07
  Speaker 2: we don't charge interest or a very low rate.
• 44:09
  Speaker 1: Of all the frauds in the world of crypto, when
• 44:12
  Speaker 1: you detail many of them, when interest rates are zero
• 44:16
  Speaker 1: and they're going to pay you eighteen percent on your coins,
• 44:20
  Speaker 1: it sounds like we're going to keep eighty two percent
• 44:23
  Speaker 1: of your coins and the eighteen percent is a scam. Well,
• 44:26
  Speaker 1: it just seems like, how can you pay when the
• 44:29
  Speaker 1: ten years yielding one and a half percent, How could
• 44:32
  Speaker 1: you legitimately pay eighteen percent other than number go up? Yeah,
• 44:38
  Speaker 1: is that all it is.
• 44:39
  Speaker 2: Maybe he bought a lot of those shoes and he
• 44:41
  Speaker 2: had a whole army of people walking in circles.
• 44:43
  Speaker 3: But he told me.
• 44:46
  Speaker 2: He told me at the I had the same reaction,
• 44:49
  Speaker 2: even when things were going great. This seemed very fishy.
• 44:51
  Speaker 2: And I was shocked when he told me he had
• 44:53
  Speaker 2: twenty billion dollars. But he told me, the banks are
• 44:56
  Speaker 2: the scammers. They're taking your deposits and they're earning huge
• 44:59
  Speaker 2: propit and they're lying to you, and they're saying they
• 45:02
  Speaker 2: can't pay you any interest.
• 45:04
  Speaker 1: By the way, they don't lie to you. They released
• 45:06
  Speaker 1: their profits every quarter. Hey, here's how much money we've
• 45:09
  Speaker 1: made on your demendon. It's all public. It's not like
• 45:11
  Speaker 1: it's hidden.
• 45:12
  Speaker 2: Yes, And I hated to find myself. I spent I
• 45:16
  Speaker 2: was over at Mashinski's apartment on the Upper East Side,
• 45:19
  Speaker 2: and I found myself like defending Wall Street being like,
• 45:22
  Speaker 2: listen to JP Morgan is very safe even in the
• 45:25
  Speaker 2: financial crisis. People didn't lose their deposits, right, But he's like,
• 45:28
  Speaker 2: somebody's lying. Either JP Morgan is lying or Celsius is lying.
• 45:33
  Speaker 2: And even in the moment, I was like, this is
• 45:35
  Speaker 2: a great line it's definitely Alex.
• 45:37
  Speaker 3: That's lying.
• 45:37
  Speaker 1: I'm gonna take Jamie Diamond over Alex Mashinsky just because
• 45:42
  Speaker 1: I'm fifty one to forty nine. I'm leaning Diamond's way.
• 45:46
  Speaker 2: Celsius did collapse in the end, and actually a month
• 45:49
  Speaker 2: or two ago, Mashinski got arrested and charged with fraud.
• 45:52
  Speaker 1: Unbelievable. So one of my favorite stories from this era
• 45:56
  Speaker 1: was the Terra Luna stable coin situation and a pretty
• 46:02
  Speaker 1: well regarded HEDGEPHND manager Mike Novograts. He got a howling
• 46:06
  Speaker 1: wolf Luna tattoo on his upper arm. Tell us a
• 46:10
  Speaker 1: little bit about Tara and Luna and Novograts.
• 46:14
  Speaker 2: So Novograts back a few years ago he gave an
• 46:17
  Speaker 2: interview to our colleague Eric Shatsker where he said something
• 46:22
  Speaker 2: that I thought was very honest and that I really
• 46:24
  Speaker 2: liked this quote. And he said, listen, this crypto thing
• 46:27
  Speaker 2: is the biggest bubble of our lifetime. There's great fortunes
• 46:30
  Speaker 2: to be made on the way up, and like, I'm
• 46:32
  Speaker 2: gonna get mine, And he.
• 46:34
  Speaker 1: Did for the most part. Let's give him credit. He
• 46:38
  Speaker 1: bought when things were low, he saw I'm not gonna
• 46:41
  Speaker 1: suggest he top ticked it, but he definitely cashed a
• 46:45
  Speaker 1: decent amount out right before the most recent collapse.
• 46:48
  Speaker 2: Yeah, I mean, I think his profits overall are high.
• 46:52
  Speaker 2: He was definitely wrong though on this Tara Luna one.
• 46:55
  Speaker 1: Well, the whole tattoo thing was just yeah, you know,
• 46:57
  Speaker 1: talk about talk about the wrong thing to etch on
• 47:00
  Speaker 1: your body.
• 47:01
  Speaker 3: Oh my god.
• 47:01
  Speaker 2: So it was run by this guy, this South Korean
• 47:05
  Speaker 2: guy named Do Kwan, who was very mean on Twitter.
• 47:08
  Speaker 2: He'd always just be insulting people if you ever questioned
• 47:10
  Speaker 2: tether But it pitch was a lot like Celsius. You
• 47:12
  Speaker 2: could earn eighteen percent. I think it actually was also
• 47:15
  Speaker 2: eighteen or nineteen percent.
• 47:16
  Speaker 1: That seems to be the magic number.
• 47:18
  Speaker 2: Yeah, that you could earn if you deposited your Terra
• 47:21
  Speaker 2: coins into the anchor protocol. And now, unlike Teather, which
• 47:26
  Speaker 2: is backed by real dollars in the bank or so
• 47:28
  Speaker 2: they say, the Terra coins were backed by lunar coins
• 47:32
  Speaker 2: and you could always trade your Terra coins for one
• 47:35
  Speaker 2: dollar worth of lunar coins. Now you might ask, why
• 47:38
  Speaker 2: do I want any lunar coins.
• 47:40
  Speaker 3: The answer is they don't ask about that.
• 47:43
  Speaker 1: They're back like Terra coins.
• 47:44
  Speaker 2: No, the lunar coins were there actually there was no
• 47:47
  Speaker 2: story from why you should buy the Lunar coins, and
• 47:50
  Speaker 2: a lot of people in crypto even when this was
• 47:53
  Speaker 2: going on, we're like, Zeke, you might want to take
• 47:55
  Speaker 2: a look at this uh Terra Luna one.
• 47:57
  Speaker 1: So even the crypto bros were skeptical of this.
• 48:01
  Speaker 2: Yes, but Nova Grats was a big investor in it,
• 48:03
  Speaker 2: and he got the Luna logo tattooed on his shoulder.
• 48:07
  Speaker 2: And I don't want to like totally let him off
• 48:09
  Speaker 2: the hook because what he said in his quote and
• 48:11
  Speaker 2: also by like tweeting about this, tweeting.
• 48:13
  Speaker 3: His tattoo, he was promoting.
• 48:15
  Speaker 2: He's promoting it, and he's bringing in people who because
• 48:18
  Speaker 2: the way to really make money on crypto is to
• 48:20
  Speaker 2: get in early.
• 48:21
  Speaker 1: Right, find greater fools to sell it to.
• 48:24
  Speaker 2: Yeah, and a lot of these insiders I'm not saying
• 48:26
  Speaker 2: him with Luna, I don't remember the details, but they
• 48:29
  Speaker 2: get special deals and they get the tokens at like
• 48:31
  Speaker 2: for a penny it can rise and fall and they're
• 48:33
  Speaker 2: still sitting pretty. And so these guys, by promoting these bubbles,
• 48:38
  Speaker 2: are bringing in new people who are going to lose
• 48:40
  Speaker 2: real money.
• 48:40
  Speaker 1: Speaking of losing real money, let's talk about the initial
• 48:44
  Speaker 1: point offerings. I was. I always thought they were sketchy.
• 48:48
  Speaker 1: I was shocked to read in the book eighty percent
• 48:51
  Speaker 1: of icos are fraudulent, explained.
• 48:54
  Speaker 2: Yeah, so this was the last bubble. It's important with
• 48:59
  Speaker 2: crypto you need to keep coming up with like a
• 49:01
  Speaker 2: new twist on the story.
• 49:03
  Speaker 1: So is that where NFTs come from and icos come from.
• 49:06
  Speaker 2: Yeah, I would say that. I mean people in the
• 49:09
  Speaker 2: new in the most recent bubble, people talked about coins right,
• 49:14
  Speaker 2: and even in sort of like a loving way. They'd
• 49:17
  Speaker 2: be like, oh, I'm buying the latest like coin It's
• 49:20
  Speaker 2: going to the moon.
• 49:21
  Speaker 1: And that literally, by the way, was the cover of
• 49:23
  Speaker 1: a BusinessWeek edition rhymes with bitcoin.
• 49:27
  Speaker 3: Oh yeah.
• 49:28
  Speaker 2: Even people who like NFTs will tell you they're basically
• 49:32
  Speaker 2: coins with pictures on them. And so icos are like
• 49:35
  Speaker 2: the previous iteration of this technology. Back in twenty seventeen,
• 49:39
  Speaker 2: you could just say, Hey, I'm gonna put dentistry on
• 49:42
  Speaker 2: the blockchain. I got denti coin. That's like a real one.
• 49:47
  Speaker 3: Actually, I think one of the more legit ones.
• 49:49
  Speaker 1: But they got like a man, how is that more
• 49:51
  Speaker 1: legit than others?
• 49:52
  Speaker 2: I like there was some real effort to like get
• 49:54
  Speaker 2: dentists to update their tooth databases or something.
• 49:57
  Speaker 1: So the most legit thing I read had to do
• 50:00
  Speaker 1: with ethereum and smart contracts. And you can imagine a
• 50:04
  Speaker 1: use case where if Taylor Swift were to put her
• 50:08
  Speaker 1: tickets up for sale, she could build into it. Hey, no,
• 50:12
  Speaker 1: nobody can can go out and sell these these for
• 50:16
  Speaker 1: fifty times what fans want to pay. If you resell them,
• 50:20
  Speaker 1: I get half of the proceeds, and that that would
• 50:23
  Speaker 1: keep the scalpurn to a minimum. Like that is a
• 50:26
  Speaker 1: use case that makes sense. None of these other things
• 50:29
  Speaker 1: seem to have a real use case.
• 50:31
  Speaker 2: Yeah, and even I mean even that use case. I
• 50:34
  Speaker 2: was frankly surprised is continually surprised to the downside in
• 50:39
  Speaker 2: this crypto world. With Apefest, you would think that this
• 50:42
  Speaker 2: is like the premiere NFT event. There's all this talk
• 50:45
  Speaker 2: about how NFTs will be good, the blockchain will be
• 50:47
  Speaker 2: good for ticketing. It turns out they do not use
• 50:50
  Speaker 2: the NFTs for ticketing, right. There's this whole other, like
• 50:53
  Speaker 2: complicated system set up to figure out how you get
• 50:56
  Speaker 2: in there. And I think a lot of this stuff
• 50:57
  Speaker 2: sounds good in theory, But wait till my mom buys
• 51:01
  Speaker 2: her Taylor Swift tickets for two thousand dollars. She tries
• 51:03
  Speaker 2: to send it to the Foxhead and then she can't
• 51:06
  Speaker 2: remember where she buried the password in her backyard. Like,
• 51:09
  Speaker 2: nobody's gonna like that. People like customer service, They like,
• 51:12
  Speaker 2: you know, to use their credit card, they get a
• 51:14
  Speaker 2: refund if they get scammed, you know. So I'm not
• 51:17
  Speaker 2: even sure that the idea that there really is demand
• 51:20
  Speaker 2: to have concert tickets be controlled in some decentralized database,
• 51:24
  Speaker 2: you know. I think there's a reason why for all
• 51:26
  Speaker 2: that we complain about Ticketmaster, there's a reason why, like
• 51:29
  Speaker 2: a central authority has grown to dominate this market.
• 51:33
  Speaker 1: And you use the example that bitcoin has been around
• 51:37
  Speaker 1: for as long as it took us to go from
• 51:39
  Speaker 1: the first website to the iPhone, longer than Airbnb and
• 51:45
  Speaker 1: Uber have been around, and those have become real businesses.
• 51:49
  Speaker 1: What is the problem that bitcoin is trying to solve.
• 51:55
  Speaker 2: I don't deny if we had a bitcoin, if we
• 51:57
  Speaker 2: had Michael Saylor here, he could probably talk quite convincingly
• 52:00
  Speaker 2: about how great bitcoin is in theory, and I would
• 52:04
  Speaker 2: just say, look at what's happened in practice. Nobody's using
• 52:07
  Speaker 2: it for anything. Even in El Salvador, where it was
• 52:10
  Speaker 2: really promoted as this great success story, where we see
• 52:12
  Speaker 2: bitcoin in the real world. Nobody likes it, nobody's using it.
• 52:16
  Speaker 2: And if this crypto stuff was so great it would
• 52:19
  Speaker 2: sell itself, you wouldn't need to be pushing it on people.
• 52:21
  Speaker 2: The technology is that people like just spread virally.
• 52:25
  Speaker 1: Huh really amusing. I want to talk about some of
• 52:28
  Speaker 1: the damage from crypto, but before we get to that,
• 52:31
  Speaker 1: you've been going to the Sam Bankman Freed trial about
• 52:36
  Speaker 1: ftx's collapse. It seems from this book there's a lot
• 52:41
  Speaker 1: of blame to people like Carolyn Ellison who ran Alami
• 52:45
  Speaker 1: to research, Gary Wang, who was their technologist and wrote
• 52:49
  Speaker 1: all the code, and Nichad Sing. Is it just that
• 52:54
  Speaker 1: they played the prisoner's dilemma better than Sam Bankman Freed,
• 52:58
  Speaker 1: like everybody was so quick to throw him under the bus.
• 53:02
  Speaker 1: Looks like there's a lot of culpability on the rest
• 53:05
  Speaker 1: of that crew. They were all adults running a business
• 53:09
  Speaker 1: that had lots of fraudulent activity going on.
• 53:12
  Speaker 2: What the trial has been so far is Sam sitting
• 53:15
  Speaker 2: there and there's been a parade of his best friends,
• 53:19
  Speaker 2: his colleagues, and they've each been saying, I'm really sorry,
• 53:23
  Speaker 2: I committed fraud. I did it with that guy over there,
• 53:27
  Speaker 2: and like the jury has been falling asleep for some
• 53:29
  Speaker 2: of the details.
• 53:30
  Speaker 1: Does the defense get up and say so, tell us
• 53:33
  Speaker 1: about the fraud. You were an adult, right, you didn't
• 53:35
  Speaker 1: do this when you were fourteen. Tell us about the
• 53:38
  Speaker 1: fraud you committed when you were running this hedge funds
• 53:41
  Speaker 1: or when you were writing the code. It's kinda that
• 53:45
  Speaker 1: kind of laid back, aren't they.
• 53:46
  Speaker 2: The problem is that if the more they hammer in
• 53:49
  Speaker 2: that these witnesses committed fraud, that would show that these
• 53:53
  Speaker 2: people know a lot about the fraud. And they're all
• 53:56
  Speaker 2: saying that they did it with Sam. A lot of times.
• 53:59
  Speaker 2: They have a lot of details about which fraud they
• 54:02
  Speaker 2: worked on and how they did it. They pulled out
• 54:04
  Speaker 2: like Google docs that show them doing the fraud. Some
• 54:06
  Speaker 2: of them even have comments from Sam on the Google doc.
• 54:09
  Speaker 2: And it's not like you get a free ride just
• 54:11
  Speaker 2: because you plead guilty. They're probably all going to jail
• 54:13
  Speaker 2: for a couple of years at least.
• 54:15
  Speaker 1: But not twenty or thirty years. No.
• 54:17
  Speaker 2: Caroline, the head of Alameda, Sam's ex girlfriend. She cried
• 54:22
  Speaker 2: on the stand when she was talking about how bad
• 54:25
  Speaker 2: she felt about participating in this fraud. I don't think
• 54:28
  Speaker 2: they're trying to minimize their own involvement. They're just saying
• 54:32
  Speaker 2: this guy was the boss, and like we did it
• 54:34
  Speaker 2: with him fair enough.
• 54:36
  Speaker 1: So let's talk a little bit about In the book,
• 54:38
  Speaker 1: you talk a lot about some of the damage crypto
• 54:44
  Speaker 1: and tether has caused. Probably the most harrowing section was
• 54:49
  Speaker 1: on human trafficking. You go to Cambodia to look at
• 54:54
  Speaker 1: some of these sleeve or prisons. How else do you
• 54:59
  Speaker 1: describe these?
• 55:00
  Speaker 2: It's pretty accurate. I mean it's really crazy. You know,
• 55:03
  Speaker 2: we all get these spam text messages right like they're
• 55:06
  Speaker 2: like Sam, did you pick up the milk on your
• 55:09
  Speaker 2: way home for the dog? They're not like that great
• 55:11
  Speaker 2: at English that don't always make sense these messages I learned.
• 55:16
  Speaker 2: They will try and make friends with you, and they'll
• 55:20
  Speaker 2: eventually try to get you to trade crypto with them
• 55:23
  Speaker 2: to try out some new hot crypto app, and they
• 55:26
  Speaker 2: always use tether. They'll say, hey, I got this great
• 55:30
  Speaker 2: trade idea for you. Just go buy some tether on
• 55:33
  Speaker 2: coinbase or some regular app and send it to my
• 55:36
  Speaker 2: special app, or we'll make lots of money.
• 55:38
  Speaker 1: You got a spam text from Vicky who sent you
• 55:41
  Speaker 1: pictures clearly not from New York, which is what she
• 55:44
  Speaker 1: told you, and you sent her one hundred dollars worth
• 55:47
  Speaker 1: of tether and you were able to track it. Yeah,
• 55:49
  Speaker 1: which is kind of surprising because we've always been told
• 55:52
  Speaker 1: all this crypto stuff is anonymous. Turns out not to
• 55:55
  Speaker 1: be very anonymous either.
• 55:56
  Speaker 2: It's kind of weird that way. I mean, it's pseudonymous.
• 56:00
  Speaker 2: So everybody's wallet has an address that's not associated with
• 56:03
  Speaker 2: their name. It's just like a string of random numbers,
• 56:06
  Speaker 2: and you can see all the transaction. If I know, like, hey,
• 56:11
  Speaker 2: this string of random numbers is Barrie's address, I might
• 56:14
  Speaker 2: even be able to go see like what exchanges you
• 56:17
  Speaker 2: used or where you sent your money. But if I
• 56:19
  Speaker 2: don't have that first clue that says this is Barry's address,
• 56:22
  Speaker 2: then it might as well be anonymous. So these messages
• 56:25
  Speaker 2: are coming from Cambodia or elsewhere in Southeast Asia, and
• 56:28
  Speaker 2: I learned that the people sending them are often victims themselves.
• 56:33
  Speaker 2: I mean I spoke with one guy. He's a young
• 56:35
  Speaker 2: guy from Vietnam. He'd been lurned to Cambodia, thinking that
• 56:39
  Speaker 2: he was going to be doing something else. When he
• 56:41
  Speaker 2: gets there, they're like, no, you're gonna scam twenty four
• 56:45
  Speaker 2: hours a day. You're not leaving this building unless you
• 56:48
  Speaker 2: pay us thousands of dollars. If you don't scam enough,
• 56:51
  Speaker 2: we're gonna beat you. We're gonna shock you with these
• 56:54
  Speaker 2: electric batons. And there's actually entire office parks in the book.
• 57:00
  Speaker 2: I go to one called Chinatown in western Cambo Tototos.
• 57:03
  Speaker 1: They're horrifying.
• 57:04
  Speaker 2: Yeah, it's like dozens of towers, each of them filled
• 57:08
  Speaker 2: with people, thousands of people who are sending these spam
• 57:11
  Speaker 2: messages who can't escape. Obviously it doesn't prove anything, but
• 57:15
  Speaker 2: what really seemed quite telling to me. I get to Chinatown,
• 57:19
  Speaker 2: the most famous of this scam compound site where this
• 57:24
  Speaker 2: Vietnamese guy interviewed had escaped from where people were tortured,
• 57:27
  Speaker 2: people were killed. What do I see right at the
• 57:30
  Speaker 2: entrance to this compound a closed shop that was a
• 57:35
  Speaker 2: currency exchange and it says right on the on the
• 57:38
  Speaker 2: big sign out front USDT like we will trade your
• 57:42
  Speaker 2: tether four dollars right here.
• 57:44
  Speaker 1: So if you want to pay ransom to get someone freed,
• 57:47
  Speaker 1: you can do it then and there.
• 57:48
  Speaker 2: So the crypto guys would say, Hey, the scams existed
• 57:52
  Speaker 2: before crypto, This isn't really crypto stuff, But I think
• 57:55
  Speaker 2: that crypto made all this a lot easier, made it
• 57:58
  Speaker 2: possible on a bigger scale. I spoke to a veteran
• 58:02
  Speaker 2: human trafficking investigator from Taiwan who'd been to Cambodia to
• 58:06
  Speaker 2: rant some young women who'd been tricked into going there
• 58:09
  Speaker 2: from Taiwan. He told me, used to be these human
• 58:12
  Speaker 2: traffickers use banks, and like maybe they'd set up give
• 58:15
  Speaker 2: fake names or whatever when they open their bank accounts,
• 58:18
  Speaker 2: but those were clues.
• 58:19
  Speaker 3: Now they use tether. What am I supposed to do?
• 58:21
  Speaker 2: I can't try, you know, he was like, this is
• 58:23
  Speaker 2: making my job of investigating human trafficking a lot harder.
• 58:27
  Speaker 1: I'm genuinely shocked the United Nations hasn't stepped into this
• 58:30
  Speaker 1: because this is really horrific.
• 58:33
  Speaker 2: You know, it is actually risen to their attention now,
• 58:36
  Speaker 2: and they actually put out a report where they estimate
• 58:40
  Speaker 2: that as many as two hundred thousand people work in
• 58:43
  Speaker 2: these scam compounds.
• 58:44
  Speaker 1: Skill Yes, that's horrible.
• 58:46
  Speaker 2: The Chinese government has cracked down and there's been a
• 58:49
  Speaker 2: number of busts, a lot of the worst compounds that
• 58:52
  Speaker 2: have moved to me and mar where they're essentially like
• 58:57
  Speaker 2: outside of the reach of law enforcement. They're in these
• 58:59
  Speaker 2: like border regions where even like the police don't go.
• 59:03
  Speaker 2: I went to one in a national park in Cambodia
• 59:06
  Speaker 2: behind like a big, big hotel.
• 59:08
  Speaker 1: You know, it's really unbelievable. Another statistic from the book
• 59:12
  Speaker 1: that blew my mind. FTX had donated money to one
• 59:18
  Speaker 1: in three members of Congress. How is that possible?
• 59:22
  Speaker 2: Yeah, So, Sam, he had this idea that you know,
• 59:25
  Speaker 2: a lot of people say there's too much money in politics.
• 59:28
  Speaker 2: He said, there's not enough money in politics. Just think
• 59:31
  Speaker 2: about how And his logic kind of made sense.
• 59:34
  Speaker 1: No, it definitely does.
• 59:35
  Speaker 2: The Congress controls these huge pots of money. And if
• 59:38
  Speaker 2: you can influence Congress to spend on your preferred causes,
• 59:43
  Speaker 2: even if it costs you, you know, one hundred million
• 59:46
  Speaker 2: dollars to buy influence, that could actually be very small
• 59:50
  Speaker 2: in comparison to how much money you get Congress to spend.
• 59:53
  Speaker 2: So he basically funneled as much money as he could
• 59:56
  Speaker 2: to everybody in Congress, and he took this really cynical
• 1:00:00
  Speaker 2: and illegal approach to it, where he was like, I
• 1:00:04
  Speaker 2: can't just give to everybody, because then the Publicans won't
• 1:00:07
  Speaker 2: like me because they know that I give to a
• 1:00:09
  Speaker 2: lot of Democrats. The Democrats won't like me if they
• 1:00:11
  Speaker 2: see that I'm not on their team. So he picked
• 1:00:14
  Speaker 2: two of his lieutenants and he was like, all right,
• 1:00:17
  Speaker 2: you're the Democrat and you're the Republican. We're going to
• 1:00:20
  Speaker 2: funnel our donations through you.
• 1:00:22
  Speaker 1: It was mostly two Democrats, but a lot once Republican.
• 1:00:26
  Speaker 3: Yeah.
• 1:00:26
  Speaker 2: So he was one of the biggest donors to the
• 1:00:29
  Speaker 2: Biden campaign. Gave something like five million dollars. And these
• 1:00:33
  Speaker 2: were not like you know, cash and bags. These were
• 1:00:35
  Speaker 2: like donations that like other corporations give. And I think
• 1:00:39
  Speaker 2: it was like pretty much two thirds to Democrats but
• 1:00:42
  Speaker 2: still a third to Republicans.
• 1:00:44
  Speaker 1: He used to work at a hedge fund. He knows
• 1:00:46
  Speaker 1: how to hedge his bets, right.
• 1:00:47
  Speaker 2: Yeah, And and he had a lot of things, a
• 1:00:49
  Speaker 2: lot of priorities. But one of the things he wanted
• 1:00:51
  Speaker 2: was for the CFTC to regulate crypto. It seemed to me,
• 1:00:56
  Speaker 2: even when things were going well, he was basically trying
• 1:00:59
  Speaker 2: to get his preferred crypto legislation passed that would effectively
• 1:01:03
  Speaker 2: cement FTX as like the go to crypto exchange that
• 1:01:07
  Speaker 2: followed all the rules and box out some of his
• 1:01:10
  Speaker 2: competitors like Binance, that were not run by Americans, didn't
• 1:01:14
  Speaker 2: have the same political influence and wouldn't be able to comply.
• 1:01:18
  Speaker 2: I think that was part of his plan to grow
• 1:01:21
  Speaker 2: and grow and grow and get out of this hole
• 1:01:24
  Speaker 2: of borrow money that he was in.
• 1:01:26
  Speaker 1: Huh. So you also mentioned in the book two of
• 1:01:30
  Speaker 1: my favorite authors, the first being Carl Hiassen, who I
• 1:01:35
  Speaker 1: just love everything he ever writes, just the best Beach
• 1:01:39
  Speaker 1: reads about the endless corruption in Florida. He's an amazingly
• 1:01:45
  Speaker 1: entertaining writer. But also Michael Lewis, who has a book
• 1:01:49
  Speaker 1: out Going Infinite that came out just around the same
• 1:01:53
  Speaker 1: time you guys did. What are your thoughts on Lewis's
• 1:01:56
  Speaker 1: portrayal of SBF What did he get wrong?
• 1:02:00
  Speaker 2: I was writing this book, I became aware that pretty
• 1:02:04
  Speaker 2: early on that Lewis might be working on crypto book too.
• 1:02:08
  Speaker 2: And this is my first book. You know, he's like
• 1:02:11
  Speaker 2: the goat like.
• 1:02:12
  Speaker 1: Poet laureate of financial rights, right right.
• 1:02:16
  Speaker 2: So that was pretty that was pretty scary to me.
• 1:02:19
  Speaker 2: But then I was at Crypto Bahamas where I saw
• 1:02:23
  Speaker 2: the Mooch. I saw Michael Lewis interviewing Sam Bankman feed
• 1:02:26
  Speaker 2: on stage. I was looking forward to hearing what he
• 1:02:28
  Speaker 2: had to say. At this point, I'd learned about the shoes,
• 1:02:31
  Speaker 2: I learned about the Pokemon game. I mean, I came
• 1:02:34
  Speaker 2: in pretty skeptical of Crypto and all I was seeing
• 1:02:36
  Speaker 2: was like a bunch of scams. And then I see
• 1:02:39
  Speaker 2: Michael Lewis on stage interviewing Sam, and he's just like
• 1:02:44
  Speaker 2: fawning all over him. He's saying great things about him,
• 1:02:46
  Speaker 2: and it goes beyond just being polite. He says, listen,
• 1:02:49
  Speaker 2: look at the traditional financial world, look at the crypto world.
• 1:02:54
  Speaker 3: Crypto's better.
• 1:02:55
  Speaker 2: And I'm like, Michael Lewis, like, I grew up reading books.
• 1:03:00
  Speaker 2: I learned a lot about finance from you. But I
• 1:03:02
  Speaker 2: really think I can't believe you would say that. So
• 1:03:05
  Speaker 2: at that point I actually wondered, maybe he's not writing
• 1:03:08
  Speaker 2: a book, maybe he's just here giving speeches, or maybe
• 1:03:11
  Speaker 2: he's working on a documentary or something. It turned out
• 1:03:14
  Speaker 2: he said he was not paid and he did.
• 1:03:16
  Speaker 3: Write a book. He was there to write a book.
• 1:03:17
  Speaker 1: So he wrote a book which turned out to be
• 1:03:19
  Speaker 1: a best seller, and he sold the movie rights to
• 1:03:22
  Speaker 1: Apple TV for a decent amount of money.
• 1:03:24
  Speaker 3: Yeah.
• 1:03:25
  Speaker 2: Now, he said something in what I assume was a
• 1:03:27
  Speaker 2: paid speech. He spoke at Bitcoin twenty twenty three in Miami.
• 1:03:32
  Speaker 2: He was on stage with Arthur Hayes, the head of bitmes,
• 1:03:35
  Speaker 2: and Michael Lewis said he got asked about He was like,
• 1:03:38
  Speaker 2: you know, all you guys here want to know do
• 1:03:40
  Speaker 2: I believe in crypto? And he's like, you, you remind
• 1:03:44
  Speaker 2: me of the born again Christians that I met when
• 1:03:48
  Speaker 2: I was writing The blind Side. You everyone wanted to
• 1:03:51
  Speaker 2: know if I believed And he's like, listen, it doesn't
• 1:03:54
  Speaker 2: matter what I think about crypto. My book isn't about
• 1:03:57
  Speaker 2: what I think about crypto. My book's about Sam bang Minfreed,
• 1:04:00
  Speaker 2: and it only matters what he thinks about crypto. And
• 1:04:04
  Speaker 2: I think this is a mistake. I think that crypto
• 1:04:07
  Speaker 2: it's like the biggest financial mania in modern times, and
• 1:04:13
  Speaker 2: there's no way to write about that accurately without having
• 1:04:17
  Speaker 2: an opinion about crypto. By just like saying, oh, I'm neutral,
• 1:04:21
  Speaker 2: I think you're missing out on explaining what's happened over
• 1:04:25
  Speaker 2: the last few years.
• 1:04:26
  Speaker 1: So if you read the end of Going Infinite, Michael
• 1:04:31
  Speaker 1: Lewis suggests that the bankruptcy trustee who said FTX was
• 1:04:37
  Speaker 1: a bigger mess than Enron, which was a giant mess
• 1:04:40
  Speaker 1: in and of itself. He implied that by the time
• 1:04:44
  Speaker 1: this is all said and done, by the time they
• 1:04:46
  Speaker 1: liquidate the venture investments and everything else, the missing eight
• 1:04:50
  Speaker 1: billion dollars is going to be found. Is that still
• 1:04:54
  Speaker 1: the case today, or has that gap marrowed has gotten wider?
• 1:04:58
  Speaker 1: What's going on with that rec of the missing funds?
• 1:05:01
  Speaker 2: It's still a bit mysterious. Now bankruptcy claims traders are
• 1:05:06
  Speaker 2: not paying, you know, ninety cents on the dollars for
• 1:05:09
  Speaker 2: FTX claims. They're going for like forty cents, all.
• 1:05:12
  Speaker 1: Right, so a little above average, but not a whole
• 1:05:15
  Speaker 1: lot above that.
• 1:05:15
  Speaker 2: So, I mean what that suggests is that they think
• 1:05:18
  Speaker 2: there's going to be a pretty good recovery, but not.
• 1:05:20
  Speaker 1: The whole something like that.
• 1:05:21
  Speaker 2: Yeah, Now, Sam Bankman Fried's lawyers, this is the defense
• 1:05:25
  Speaker 2: of Sam Bankman Freed. But like, hey, the money isn't
• 1:05:28
  Speaker 2: actually gone, right.
• 1:05:29
  Speaker 1: It's just misplaced. Like literally other places are saying, hey,
• 1:05:33
  Speaker 1: is this your three hundred million dollars in bitcoin we're
• 1:05:36
  Speaker 1: holding now.
• 1:05:37
  Speaker 2: First of all, it's come out at trial. Everyone at
• 1:05:39
  Speaker 2: all the witnesses have said, we committed fraud, We took
• 1:05:42
  Speaker 2: the customer's money, we knew it was wrong. And Sam
• 1:05:45
  Speaker 2: bankman Fried's lawyers have brought this up and they're like, hey,
• 1:05:48
  Speaker 2: how about we bring up as a defense that like
• 1:05:50
  Speaker 2: some of these bets worked out and maybe the money's
• 1:05:53
  Speaker 2: not gone. And the judge addressed this and he said
• 1:05:56
  Speaker 2: the argument that you're making, and that Michael Lewis is
• 1:06:00
  Speaker 2: semi making in the book, He's like, that would be
• 1:06:02
  Speaker 2: like I robbed the Federal Reserve and then I went
• 1:06:05
  Speaker 2: and bought a million Powerball tickets. Then I won, and
• 1:06:09
  Speaker 2: I've returned the million dollars. It doesn't matter. You still
• 1:06:12
  Speaker 2: rob the Federal Reserve, You're still going to jail.
• 1:06:14
  Speaker 1: So, to be fair, Lewis says, it wasn't that the
• 1:06:18
  Speaker 1: bets were going to pay off. It's that all the
• 1:06:20
  Speaker 1: money wasn't accounted for properly, and if that happens, maybe
• 1:06:26
  Speaker 1: that money you'll be missing. Since then, we've learned a
• 1:06:29
  Speaker 1: lot of that money has been speculated with or gambled with.
• 1:06:33
  Speaker 2: If Lewis was saying that the money was simply misplaced,
• 1:06:36
  Speaker 2: like that has been proven to be wrong. The money
• 1:06:39
  Speaker 2: was definitely not just misplaced, and they found it like
• 1:06:42
  Speaker 2: it was bat on a lot of things. And for example,
• 1:06:45
  Speaker 2: it came out at the trial that customers give money
• 1:06:48
  Speaker 2: to the exchange, they're counting on the exchange holding it
• 1:06:51
  Speaker 2: and giving it back when they want to withdraw, just
• 1:06:53
  Speaker 2: like you'd count on e trade to have your money
• 1:06:55
  Speaker 2: when you want to take it out. And what he
• 1:06:58
  Speaker 2: had done in one instance was give f five hundred
• 1:07:00
  Speaker 2: million dollars to his hedge fund to invest in some
• 1:07:03
  Speaker 2: AI company, and that turned out to be it looks
• 1:07:07
  Speaker 2: like it was a pretty.
• 1:07:07
  Speaker 1: Good bet, giant winner.
• 1:07:09
  Speaker 2: Yeah, but it doesn't mean it was okay. The customers
• 1:07:12
  Speaker 2: never agreed that he could gamble with their money. They
• 1:07:15
  Speaker 2: thought that they were gambling with their money on dogecoin
• 1:07:18
  Speaker 2: or whatever.
• 1:07:19
  Speaker 1: Right this is, you know. Part of the description was
• 1:07:23
  Speaker 1: Alameda had broader parameters for going over the limits, the
• 1:07:31
  Speaker 1: lending limits, because they were helping to facilitate making a market.
• 1:07:35
  Speaker 1: But that would have been a little over not billions
• 1:07:37
  Speaker 1: of dollars, over tens of billions of dollars over.
• 1:07:40
  Speaker 2: Yeah, And what the witnesses have testified to is that
• 1:07:43
  Speaker 2: from actually very early on, Alameda was allowed to treat
• 1:07:46
  Speaker 2: like the customer money like a piggy bank and use
• 1:07:49
  Speaker 2: it to gamble on whatever. And actually, one of the
• 1:07:51
  Speaker 2: things that Michael Lewis has said that has also been
• 1:07:55
  Speaker 2: shown to not be true at the trial, he said, FTX,
• 1:08:00
  Speaker 2: if you set aside the fraud, it was a good business, right.
• 1:08:03
  Speaker 1: Well, the argument is, hey, we're gonna do a bajillion
• 1:08:07
  Speaker 1: crypto trades and take a tiny little piece of each
• 1:08:10
  Speaker 1: and it's a couple of billion dollars a year.
• 1:08:12
  Speaker 2: So the problem is that FTX, the way the exchange
• 1:08:16
  Speaker 2: was set up, they claimed they had this great risk
• 1:08:18
  Speaker 2: management system, this amazing liquidation engine, but it turned out
• 1:08:22
  Speaker 2: that they didn't, and the exchange over the years actually
• 1:08:25
  Speaker 2: took big hits at different times, and that they covered
• 1:08:28
  Speaker 2: those up by shunting the losses to Alameda.
• 1:08:32
  Speaker 1: So not just hacks, but actually trading losses.
• 1:08:35
  Speaker 2: Yes, so the exchange lost almost a billion dollars because
• 1:08:39
  Speaker 2: of a failure of the liquidation engine on something called
• 1:08:42
  Speaker 2: mobile coin. And if they had disclosed this first of all,
• 1:08:47
  Speaker 2: that would have erased all the exchange's profits, right, so
• 1:08:49
  Speaker 2: like no more venture capital, you know, thirty two billion valuation.
• 1:08:53
  Speaker 2: So instead they had Alameda take the hit. And Alameda
• 1:08:56
  Speaker 2: could take the hit because they had a limited access
• 1:08:59
  Speaker 2: to the customer money, right, and there.
• 1:09:01
  Speaker 1: Were no outside real owners because it was all mostly
• 1:09:04
  Speaker 1: sam bankman Freed.
• 1:09:05
  Speaker 2: So that is not a good business. And it's looking
• 1:09:12
  Speaker 2: like the truth is much closer to this was a
• 1:09:14
  Speaker 2: fraud from the start. Then this was a good business
• 1:09:17
  Speaker 2: that was that got out of control because Sam bankmcfreed
• 1:09:20
  Speaker 2: wasn't paying attention.
• 1:09:21
  Speaker 1: So the summation that I came away from with your book,
• 1:09:25
  Speaker 1: as opposed to lots of of the other things I've
• 1:09:27
  Speaker 1: read on crypto, is there's no regulation, there's no disclosure requirements,
• 1:09:33
  Speaker 1: there's no transparency. When there's a billion dollar loss, nobody
• 1:09:38
  Speaker 1: says anything. It's all covered up. And on top of
• 1:09:42
  Speaker 1: all of that, there's no federal Reserve or federal government
• 1:09:45
  Speaker 1: as a backstop. As much as the libertarian crypto bros,
• 1:09:50
  Speaker 1: the FDIC and the government. Hey, no matter what happened
• 1:09:53
  Speaker 1: during the financial crisis or during even during the pandemic,
• 1:09:57
  Speaker 1: my ATM card still worked.
• 1:09:59
  Speaker 2: I don't talk about the SEC that much in the book,
• 1:10:02
  Speaker 2: and I actually would blame the SEC for not being
• 1:10:04
  Speaker 2: a little quicker to crack down on some of this
• 1:10:07
  Speaker 2: crypto stuff. But I think the book is, if anything, like,
• 1:10:10
  Speaker 2: an argument for financial regulation and saying that some of
• 1:10:13
  Speaker 2: these age old rules make sense. There's a reason why
• 1:10:16
  Speaker 2: companies have to disclose stuff, and it's to prevent exactly
• 1:10:20
  Speaker 2: things like this FTX collapse.
• 1:10:22
  Speaker 1: Really really interesting stuff. So you guys have sniped at
• 1:10:25
  Speaker 1: each other a little bit in public, You've traded barbs.
• 1:10:29
  Speaker 1: What's it like when an author whose books you've loved
• 1:10:33
  Speaker 1: is taken a swing at you.
• 1:10:35
  Speaker 2: Yeah, he said some pretty nasty things to The New
• 1:10:39
  Speaker 2: York Times about me.
• 1:10:40
  Speaker 1: Oh really, what did he say?
• 1:10:42
  Speaker 3: He called me?
• 1:10:43
  Speaker 2: He said that I was skeevier than Sam Bankman Freed.
• 1:10:47
  Speaker 1: Come on, really, Uh that's not right.
• 1:10:50
  Speaker 2: Yeah, So look, I didn't like that, And I think
• 1:10:55
  Speaker 2: it's been pretty cool. A lot of the reviews have
• 1:10:57
  Speaker 2: compared our books, and I really didn't imagine that people
• 1:11:02
  Speaker 2: would prefer my book to Michael Lewis's, and I've been
• 1:11:06
  Speaker 2: amazed to see that it's gotten such good reviews.
• 1:11:09
  Speaker 1: This is the book to read on crypto, is what
• 1:11:12
  Speaker 1: wired said, read the other SBF book.
• 1:11:16
  Speaker 2: What I realized when I finished the book is that
• 1:11:19
  Speaker 2: before all this, I was just like, you know what,
• 1:11:21
  Speaker 2: this was an amazing adventure. I've always wanted to write
• 1:11:25
  Speaker 2: a book like this. I'm really proud of how it
• 1:11:27
  Speaker 2: came out. I'm sure Michael Lewis's book is going to
• 1:11:30
  Speaker 2: be a hit, but like whatever, I don't care about
• 1:11:32
  Speaker 2: his book. I think people should read this, and it's
• 1:11:35
  Speaker 2: going to be and it's a lot of fun. I
• 1:11:37
  Speaker 2: actually just don't know where I'm going to get another
• 1:11:39
  Speaker 2: story like this, Like this is like the story I've
• 1:11:41
  Speaker 2: been waiting for my whole life.
• 1:11:42
  Speaker 1: Well, you're a relatively young guy. I'm sure there's another
• 1:11:46
  Speaker 1: book that will come along. This is really a deeply
• 1:11:51
  Speaker 1: researched work of investigative journalism. Number go up. And if
• 1:11:56
  Speaker 1: you were skeptical or even just crypto curious beforehand, it's
• 1:12:01
  Speaker 1: hard to read this and not come away with the
• 1:12:04
  Speaker 1: thought that this is a massive bubble that will end
• 1:12:07
  Speaker 1: badly for everybody involved.
• 1:12:09
  Speaker 3: You know what.
• 1:12:10
  Speaker 2: I've been particularly pleased. I've gotten some comments from crypto
• 1:12:13
  Speaker 2: people and they've said that they actually really liked the book,
• 1:12:17
  Speaker 2: and one guy said, please stay in crypto. We need
• 1:12:20
  Speaker 2: you to make fun of us.
• 1:12:21
  Speaker 1: So when I put something out on Twitter yesterday saying hey,
• 1:12:25
  Speaker 1: I got Zeke Fox tomorrow, what should I ask him?
• 1:12:28
  Speaker 1: There were a handful of kund of goofy questions. Ask
• 1:12:30
  Speaker 1: him if he's shorted bitcoin was one of them. Someone said, hey,
• 1:12:36
  Speaker 1: you know, would you and Michael Lewis ever this Someone
• 1:12:39
  Speaker 1: slipped into a DM and said, hey, would you and
• 1:12:41
  Speaker 1: Michael Lewis ever sit down on a stage together and
• 1:12:44
  Speaker 1: have a debate about Sam bankmin Freed, FTX and crypto.
• 1:12:48
  Speaker 2: I would love to do it, Michael Lewis, if you're listening,
• 1:12:51
  Speaker 2: let's do it.
• 1:12:52
  Speaker 3: You know we can.
• 1:12:54
  Speaker 2: You're a big draw, we can sell tickets, we can
• 1:12:56
  Speaker 2: give money to one of the charities that SBF stiffed.
• 1:13:00
  Speaker 1: And to be fair, I really enjoyed both books, but
• 1:13:03
  Speaker 1: they're two very different types of books. The one other
• 1:13:06
  Speaker 1: question I wanted to ask you before we get to
• 1:13:08
  Speaker 1: our favorite questions. You were part of the team that
• 1:13:11
  Speaker 1: wrote this interesting BusinessWeek series on how local New York
• 1:13:18
  Speaker 1: state courts had been weaponized by debt collectors. Signed here
• 1:13:23
  Speaker 1: to Lose Everything. You want a lob award for that?
• 1:13:26
  Speaker 1: Tell us a little bit about that bit of investigative journalism.
• 1:13:30
  Speaker 2: One of the best threads that I pulled in my
• 1:13:33
  Speaker 2: whole career has been this world of brokers who sell
• 1:13:38
  Speaker 2: small business loans. It's called merchant cash advance. And basically
• 1:13:43
  Speaker 2: the guys who were like worked for Jordan belfourt like
• 1:13:46
  Speaker 2: back in the nineties. That whole business of cold calling
• 1:13:49
  Speaker 2: people and selling stocks has dried up and if you're
• 1:13:51
  Speaker 2: still but if you still want to cold call people
• 1:13:53
  Speaker 2: and earned commission, a lot of those guys now sell
• 1:13:56
  Speaker 2: merchant cash advance to small businesses. It's like calling up
• 1:13:59
  Speaker 2: a boudet and being like, hey, do you need ten grand.
• 1:14:02
  Speaker 2: I'll get it to tomorrow. But if you sign up,
• 1:14:05
  Speaker 2: you're going to have to pay back like fifteen and
• 1:14:07
  Speaker 2: two months or something like that. Crazy rates way higher
• 1:14:10
  Speaker 2: than loan sharks.
• 1:14:11
  Speaker 1: Sounds usurious and should be illegal.
• 1:14:13
  Speaker 2: Yeah, but they've got all these loopholes, and the series
• 1:14:16
  Speaker 2: was about this one amazing loophole that they came up with.
• 1:14:21
  Speaker 2: These guys are super creative, and it was like, this is.
• 1:14:25
  Speaker 1: The confession of judgment that's been around for a long time,
• 1:14:28
  Speaker 1: but it wasn't really used.
• 1:14:30
  Speaker 2: Yeah, so these guys they would if if you were
• 1:14:33
  Speaker 2: the bodega, you would have to before you got the loan,
• 1:14:36
  Speaker 2: you'd have to sign a paper that said I have
• 1:14:40
  Speaker 2: defaulted on this loan and if judge when you see
• 1:14:43
  Speaker 2: this document, please rule against me and seize my assets.
• 1:14:47
  Speaker 2: So the lender would be holding that document and if
• 1:14:50
  Speaker 2: they ever.
• 1:14:50
  Speaker 1: Dated or undated, because if you're getting the loan on
• 1:14:53
  Speaker 1: October first and the confession of judgment is dated October first,
• 1:14:57
  Speaker 1: seems a little sketchy.
• 1:14:58
  Speaker 2: They had all that cover. The wording was not exactly
• 1:15:01
  Speaker 2: how I just said it. It was it all. It
• 1:15:03
  Speaker 2: would all get stamped. It would be the point of
• 1:15:06
  Speaker 2: the series is this was legal. You could do this.
• 1:15:09
  Speaker 2: You could take it to court. So what would happen
• 1:15:12
  Speaker 2: is the bodega misses a payment and yeah, the lender
• 1:15:15
  Speaker 2: goes to court with this document no warning. They get
• 1:15:19
  Speaker 2: it stamped because you already signed it. And then, amazingly,
• 1:15:22
  Speaker 2: the lender could take this document to New York City Marshall,
• 1:15:28
  Speaker 2: who was like a sheriff sheriff, and that sheriff would
• 1:15:31
  Speaker 2: then fact something to the bank where the bodega has
• 1:15:35
  Speaker 2: a bank account and get the whole fifteen thousand right there.
• 1:15:39
  Speaker 2: So instead of waiting two months to get your you
• 1:15:41
  Speaker 2: serious return, you get it in like a week or
• 1:15:44
  Speaker 2: two if the bodega missed a payment, or even if
• 1:15:47
  Speaker 2: you just claim they did, because there's no chance for
• 1:15:49
  Speaker 2: them to contest it.
• 1:15:50
  Speaker 1: Wow.
• 1:15:50
  Speaker 2: So me and my colleague Zach Miterer did a series
• 1:15:53
  Speaker 2: about this. We wrote about a bunch of crazy characters
• 1:15:58
  Speaker 2: who were exploiting this loophole, and New York State passed
• 1:16:02
  Speaker 2: the law closing this loophole. After that, they moved to
• 1:16:05
  Speaker 2: Connecticut and started doing it there. We exposed that loophole,
• 1:16:08
  Speaker 2: Connecticut passed the law closing the loophole. I'm sure they
• 1:16:11
  Speaker 2: found a new state.
• 1:16:12
  Speaker 1: So how did you talk about a thread to pull?
• 1:16:15
  Speaker 1: How did you find this?
• 1:16:16
  Speaker 2: I was writing about these crooked brokers and I was
• 1:16:20
  Speaker 2: doing I did a kind of fun story about how
• 1:16:22
  Speaker 2: it was around the time The Wolf of Wall Street
• 1:16:24
  Speaker 2: came out, and it was the point of the story
• 1:16:26
  Speaker 2: was sort of like these guys are down on their
• 1:16:28
  Speaker 2: luck and like the cold calling business is no good anymore.
• 1:16:32
  Speaker 2: And a lot of these guys so I was spent
• 1:16:34
  Speaker 2: a long time taking them out for you know, stakes
• 1:16:38
  Speaker 2: at Harry's or whatever downtown, and they a lot of
• 1:16:42
  Speaker 2: them told me they'd gotten into this cash advanced business. Finally,
• 1:16:46
  Speaker 2: I was like, what is this cash advanced business that
• 1:16:48
  Speaker 2: you're all doing?
• 1:16:48
  Speaker 3: Now? This might be kind of interesting.
• 1:16:51
  Speaker 2: And one of the first guys I met in it,
• 1:16:53
  Speaker 2: this is back in like twenty fourteen. I went to
• 1:16:56
  Speaker 2: this guy's office. So the Financial district like it's like
• 1:16:58
  Speaker 2: the it's got the low office rents in New York.
• 1:17:01
  Speaker 2: These offices are like dumps. I go to this guy.
• 1:17:04
  Speaker 1: It's a Wall Street address, right.
• 1:17:05
  Speaker 2: So I go to this guy's office who runs this
• 1:17:08
  Speaker 2: thing called Pearl Capital. I meet this guy named Abe
• 1:17:12
  Speaker 2: runs Pearl Capital, and it's one of these cash advands
• 1:17:16
  Speaker 2: outfits that charge like five hundred percent interest. And it's
• 1:17:19
  Speaker 2: like this dumpy office with like cases of red bulls
• 1:17:22
  Speaker 2: stacked up.
• 1:17:23
  Speaker 1: They're not wasting money on marble and walnut.
• 1:17:26
  Speaker 3: No, no, no.
• 1:17:27
  Speaker 2: And I meet one of his his minions, who is
• 1:17:30
  Speaker 2: like eighteen years old. He had this He has his
• 1:17:33
  Speaker 2: minion give me a ride home. The guy's driving like
• 1:17:36
  Speaker 2: a V twelve Mercedes. He has this like high school
• 1:17:40
  Speaker 2: dropout who can with this thick Brooklyn accent. And as
• 1:17:45
  Speaker 2: he drives me home in his one hundred thousand dollars car.
• 1:17:48
  Speaker 2: He's calling these bodega owners and being like, you're laid
• 1:17:52
  Speaker 2: on your payment, and I'm just like, what is with
• 1:17:54
  Speaker 2: these guys? And so Abe told me, you see my
• 1:17:58
  Speaker 2: empire here with like the staying I'm going to sell
• 1:18:01
  Speaker 2: this company to like a hedge fund. We're making so
• 1:18:03
  Speaker 2: much money. I'm going to make a hundred million dollars.
• 1:18:06
  Speaker 2: I'm gonna be rich.
• 1:18:07
  Speaker 1: Just just don't tell any of that to an investigative
• 1:18:11
  Speaker 1: reporter from Business Week, and you might have something left
• 1:18:14
  Speaker 1: to sell.
• 1:18:15
  Speaker 3: Well.
• 1:18:15
  Speaker 2: So he did tell me that, and then I was like,
• 1:18:18
  Speaker 2: I was newer at this, so I wasn't quite sure
• 1:18:20
  Speaker 2: how to do the story. But then one day I
• 1:18:22
  Speaker 2: obtained a letter and it said, dear Abe, we would
• 1:18:28
  Speaker 2: like to buy your company for a hundred million dollars, sincerely,
• 1:18:33
  Speaker 2: Goldman Sachs.
• 1:18:34
  Speaker 1: Get out yes, and did he sell?
• 1:18:37
  Speaker 2: He did sell. He didn't get quite a hundred million.
• 1:18:39
  Speaker 2: He sold to a different company, and he had actually
• 1:18:42
  Speaker 2: he moved. He did the Puerto Rico tax thing, right.
• 1:18:44
  Speaker 1: But you talked about in the book, By the way,
• 1:18:46
  Speaker 1: what is it about Puerto Rico, Miami, Bahamas? All these
• 1:18:50
  Speaker 1: fraudsters they like warm weather. What's that about.
• 1:18:54
  Speaker 2: You can actually, you can get out of all your
• 1:18:56
  Speaker 2: taxes by moving her company and yourself to.
• 1:18:58
  Speaker 1: Puerto Rico for Puerto Rican tax rate. That's all you are.
• 1:19:03
  Speaker 2: Yeah, no federal tax, capital Dames tax. Yeah, but you
• 1:19:06
  Speaker 2: have to live in Puerto Rico for more than half
• 1:19:08
  Speaker 2: the year.
• 1:19:09
  Speaker 1: So if you don't want to pay New York state tax,
• 1:19:12
  Speaker 1: New York doesn't care where you live as long as
• 1:19:14
  Speaker 1: you're not in New York for more than half the year.
• 1:19:17
  Speaker 1: Puerto Rico is saying, no, you have to be here,
• 1:19:21
  Speaker 1: rainy season, hots it whatever. Yeah, half a year and
• 1:19:25
  Speaker 1: a day.
• 1:19:25
  Speaker 2: And so it takes like a certain kind of person
• 1:19:27
  Speaker 2: who's so concerned about maximizing their money that they're willing
• 1:19:31
  Speaker 2: to do that.
• 1:19:32
  Speaker 1: Why would you want to live someplace if you could
• 1:19:35
  Speaker 1: afford not to.
• 1:19:36
  Speaker 2: Well, this this ave guy, he had a funny he
• 1:19:38
  Speaker 2: was a great character. At one point, James Franco was
• 1:19:42
  Speaker 2: talking to him about playing him in the movie. That
• 1:19:43
  Speaker 2: didn't help really, but he said he so he grew
• 1:19:47
  Speaker 2: up poor in Brooklyn. He was from this big family
• 1:19:50
  Speaker 2: and he said that, you know, like riding the subway
• 1:19:53
  Speaker 2: was a treat because the parents weren't going to pay
• 1:19:55
  Speaker 2: like twenty bucks to swipe everybody in, right, And he
• 1:19:58
  Speaker 2: was like, when I was younger, when I was poor,
• 1:20:01
  Speaker 2: if you asked me, I would have said, what's the
• 1:20:03
  Speaker 2: difference between ten million dollars and one hundred million dollars?
• 1:20:06
  Speaker 2: And he's like, now that I got it, I know
• 1:20:08
  Speaker 2: there's a difference, and like he really wanted to get
• 1:20:11
  Speaker 2: to that next level.
• 1:20:13
  Speaker 1: That's really interesting. All right, So I only have you
• 1:20:17
  Speaker 1: for a few more minutes. Let me jump to my
• 1:20:20
  Speaker 1: favorite questions. We'll kind of make this a speed round,
• 1:20:24
  Speaker 1: starting with what have you been streaming? Tell us some
• 1:20:27
  Speaker 1: of your favorite Netflix, Amazon Prime, or even podcasts you
• 1:20:32
  Speaker 1: listen to.
• 1:20:32
  Speaker 2: So my recommendation is a series of Korean action movies.
• 1:20:38
  Speaker 2: I love action movies.
• 1:20:39
  Speaker 1: Oh really, It's.
• 1:20:41
  Speaker 2: Called The one that I like the best is called
• 1:20:43
  Speaker 2: The Roundup. That's entry number two in the Crime City series,
• 1:20:48
  Speaker 2: and it stars this guy down Lee, and he plays
• 1:20:51
  Speaker 2: he's like the prototypical cop from like an eighties nineties
• 1:20:55
  Speaker 2: action movie, where like he doesn't follow the rules, but
• 1:20:58
  Speaker 2: he always gets his guy right. You know, he's always
• 1:21:00
  Speaker 2: like beating up the suspect instead of you know, asking
• 1:21:03
  Speaker 2: him the questions, like the other cops do. And it's
• 1:21:06
  Speaker 2: got it's funny, it's got great action scenes.
• 1:21:10
  Speaker 3: I love it.
• 1:21:11
  Speaker 1: Yes title or you watch it dubbed.
• 1:21:14
  Speaker 2: You gotta get subtitles. And I'm waiting there's the roundup.
• 1:21:17
  Speaker 2: Three is out. It came out in theaters, but you
• 1:21:20
  Speaker 2: can't stream it yet, so I'm waiting for for number three.
• 1:21:23
  Speaker 1: All right, so let's talk about your early mentors who
• 1:21:25
  Speaker 1: helped shape your career.
• 1:21:28
  Speaker 2: My first job as a reporter was at a paper
• 1:21:32
  Speaker 2: called the Brooklyn Paper. It was like a free weekly
• 1:21:34
  Speaker 2: you got at the supermarket. I was an unpaid intern.
• 1:21:37
  Speaker 2: My boss was Gersh Kuntsman, and he was like a
• 1:21:41
  Speaker 2: tabloid guy he'd worked at the Post. He was an
• 1:21:44
  Speaker 2: amazing mentor because he was he was a very tough editor,
• 1:21:48
  Speaker 2: and he insisted that each of the stories be interesting,
• 1:21:52
  Speaker 2: like we couldn't, we wouldn't. There was no like meandering.
• 1:21:55
  Speaker 2: The story had to have a point right before when
• 1:21:57
  Speaker 2: you pitch the story, had to think of like what
• 1:21:58
  Speaker 2: the headline would be and why anybody would care about this?
• 1:22:01
  Speaker 2: He even if you came back. I was working for
• 1:22:05
  Speaker 2: him when Obama won and he was like, all right,
• 1:22:08
  Speaker 2: go find some people who are happy. About this interview
• 1:22:10
  Speaker 2: him come back with some quotes, and I think it
• 1:22:12
  Speaker 2: was rainy, so I spent like a couple hours out
• 1:22:14
  Speaker 2: in the rain, stopping people on their way home from
• 1:22:17
  Speaker 2: work and being like, what do you think about this?
• 1:22:19
  Speaker 2: You know, not like the most fun assignment. I came
• 1:22:21
  Speaker 2: back with what I thought were some pretty good quotes,
• 1:22:23
  Speaker 2: and he was like, those quotes are boring. Get back
• 1:22:26
  Speaker 2: out there, and like. I didn't like it at the time,
• 1:22:29
  Speaker 2: especially because I was not getting paid, but I think
• 1:22:32
  Speaker 2: that that's a It's true. You got to put in
• 1:22:34
  Speaker 2: the time in this crypto world. I spent day after
• 1:22:36
  Speaker 2: day talking to these guys.
• 1:22:38
  Speaker 1: You you must have been twenty countries in the book.
• 1:22:41
  Speaker 1: I mean, you traveled all around the world.
• 1:22:43
  Speaker 2: I really thought, all right, it's my first book.
• 1:22:45
  Speaker 3: I don't know.
• 1:22:46
  Speaker 2: I don't want to disappoint anybody. I want the reader
• 1:22:48
  Speaker 2: to feel like I did my best. I went to
• 1:22:50
  Speaker 2: look at everything I could think of, and like, any
• 1:22:53
  Speaker 2: questions you had, I really did my best to go
• 1:22:56
  Speaker 2: to Cambodia to answer them, or to El Salvador to
• 1:22:58
  Speaker 2: see if, like this bitcoin experiment it was real. So
• 1:23:01
  Speaker 2: maybe some part of that came from Gersh telling me
• 1:23:03
  Speaker 2: quotes are boring. Get back out there to the subway station,
• 1:23:06
  Speaker 2: ask people about the election.
• 1:23:08
  Speaker 1: So let's talk about some other books. What are you
• 1:23:11
  Speaker 1: reading and what are some of your favorites.
• 1:23:13
  Speaker 2: My picks are there's a pretty mainstream because the kind
• 1:23:16
  Speaker 2: of book that I wrote is the kind of book
• 1:23:18
  Speaker 2: that I love. Like when I was a teenager, I
• 1:23:21
  Speaker 2: always I loved these crazy nonfiction adventures. So that was
• 1:23:26
  Speaker 2: like Into thin Air by John Krakauer or The Perfect Storm,
• 1:23:31
  Speaker 2: or I loved Bringing Down the House by Ben Mezrich
• 1:23:35
  Speaker 2: about the Mit Blackjack Kids. And I still love that
• 1:23:38
  Speaker 2: kind of book, like David gran The Last City of
• 1:23:41
  Speaker 2: z or Patrick Rading Keith. I just I love these
• 1:23:45
  Speaker 2: like true stories that are too crazy to believe.
• 1:23:50
  Speaker 1: Have you ever read Endurance the Shackleford story. No, that
• 1:23:56
  Speaker 1: put that at the top of your list. The book
• 1:23:59
  Speaker 1: has to be true because if it was fiction, people
• 1:24:01
  Speaker 1: would throw it away and say, this is just too
• 1:24:04
  Speaker 1: not believable. If you like Into thin Air, oh this
• 1:24:07
  Speaker 1: is the book that started that genre. It's insane.
• 1:24:10
  Speaker 3: Oh nice, I will check it out.
• 1:24:11
  Speaker 1: So that's a good I have a more often.
• 1:24:14
  Speaker 2: One that you might you might want to check out
• 1:24:17
  Speaker 2: is called The Tiger by John Valiant, and it's about
• 1:24:21
  Speaker 2: like a killer tiger in Siberia.
• 1:24:24
  Speaker 3: Huh.
• 1:24:24
  Speaker 2: And the guys who like they're guys who are like
• 1:24:27
  Speaker 2: tiger detectives who have to go find the killer tiger
• 1:24:29
  Speaker 2: are all true, right, I mean, one of the best
• 1:24:31
  Speaker 2: of nonfiction books of this genre. Right now, I'm reading
• 1:24:35
  Speaker 2: a lot of Diary of a Wimpy Kid to my children.
• 1:24:39
  Speaker 2: I have twins who are six, right, and my son
• 1:24:42
  Speaker 2: loves this serious Diary of the Wimpy Kid. Actually very boring.
• 1:24:45
  Speaker 2: I don't like it. I actually like children's books a
• 1:24:49
  Speaker 2: lot of the time, but these Wimpy Kid books, it's
• 1:24:51
  Speaker 2: the number one children's book.
• 1:24:52
  Speaker 3: They're super regular.
• 1:24:54
  Speaker 2: They're just like it's a it's a kid's diary, you know,
• 1:24:56
  Speaker 2: it's it's a little repetitive. There's like twenty of them,
• 1:25:00
  Speaker 2: almost to the end. But then they eli said, we're
• 1:25:02
  Speaker 2: going to start back at the beginning.
• 1:25:04
  Speaker 1: No good. So let's get to our last two questions.
• 1:25:09
  Speaker 1: What sort of advice would you give to a recent
• 1:25:12
  Speaker 1: college grad who was interested in a career in journalism,
• 1:25:16
  Speaker 1: investigative reporting, finance, or crypto. What would you suggest to them.
• 1:25:20
  Speaker 2: If you get into financial journalism, one thing I didn't
• 1:25:24
  Speaker 2: really understand is that finance guys, a lot of them
• 1:25:28
  Speaker 2: are on their on the phone all day. They're just
• 1:25:31
  Speaker 2: gossiping with their buddies, and you can like get in
• 1:25:33
  Speaker 2: the mix. And if you just act like you belong,
• 1:25:36
  Speaker 2: you can call these guys up and be like, hey,
• 1:25:39
  Speaker 2: did you hear about Jill at Goldman Sachs, Like I
• 1:25:41
  Speaker 2: heard she took a big loss last week, And they'll
• 1:25:43
  Speaker 2: talk about it with Happy to Dish. You know, they're
• 1:25:45
  Speaker 2: talking with their friends about the same stuff. If you
• 1:25:48
  Speaker 2: don't act super official and you just feel like you're
• 1:25:50
  Speaker 2: part of the mix, people will talk to you about
• 1:25:53
  Speaker 2: what's going on at work.
• 1:25:54
  Speaker 1: Because now you let them in on the secret method.
• 1:25:56
  Speaker 3: Yeah, go for it.
• 1:25:59
  Speaker 1: That's amazing. And finally, what do you know about the
• 1:26:01
  Speaker 1: world of again investigative journalism, reporting, or finance today? You
• 1:26:06
  Speaker 1: wish you knew? I don't know, when did you begin
• 1:26:08
  Speaker 1: your career, like fifteen twenty years ago?
• 1:26:11
  Speaker 3: That's about right.
• 1:26:11
  Speaker 2: Yeah, There's one thing about the world of crypto that
• 1:26:14
  Speaker 2: I wish I knew when I started this book, which
• 1:26:16
  Speaker 2: is that number goes up, numbergo I actually wish I
• 1:26:20
  Speaker 2: knew that. Alameda Research Sam bank, mcfred's head fund was
• 1:26:24
  Speaker 2: secretly borrowing all the customer money from FTX cause I'm
• 1:26:28
  Speaker 2: still kicking myself that I didn't catch this guy. That
• 1:26:30
  Speaker 2: could have been like my claim to fame.
• 1:26:32
  Speaker 1: Really interesting stuff. Thanks Zeke for being so generous with
• 1:26:34
  Speaker 1: your time. We have been speaking with Zeke Fox, author
• 1:26:38
  Speaker 1: of Number Go Up, Inside Crypto's Wild Ride and Staggering Fall.
• 1:26:43
  Speaker 1: If you enjoy this conversation, check out on any of
• 1:26:46
  Speaker 1: the previous five hundred or so discussions we've had over
• 1:26:50
  Speaker 1: the past nine years. You can find those at iTunes, Spotify, YouTube,
• 1:26:56
  Speaker 1: wherever you find your favorite podcast. Sign up for my
• 1:27:00
  Speaker 1: daily reading list at rid Helts dot com. Follow me
• 1:27:03
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• 1:27:07
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• 1:27:11
  Speaker 1: if I did not thank the crack team who puts
• 1:27:14
  Speaker 1: these conversations together each week. Rich Subnani is my audio
• 1:27:18
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• 1:27:22
  Speaker 1: Luke is my producer. Sean Russo is my researcher. I'm
• 1:27:26
  Speaker 1: Barry Ridholts. You've been listening to Masters in Business on
• 1:27:30
  Speaker 1: Bloomberg Radio.